Nabasmita Bordoloi , Dr. Kalyan Mukherjee

International Journal of Interdisciplinary Research in Science Society and Culture(IJIRSSC) Vol: 3, Issue:1, (June Issue), 2017 ISSN: (P) 2395-4345, (O) 2455-2909 Impact Factor: 1.585

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A Comparative Study on the CSR

Activities of Public and Private Sector

Commercial Banks

Nabasmita Bordoloi1, Dr. Kalyan Mukherjee

2

1Research Scholar, Department of Commerce, Gauhati University and

Assistant Professor, Department of Commerce & Economics,

University of Science & Technology, Meghalaya 2Ph. D Supervisor, Department of Commerce, Gauhati University and

Associate Professor, Department of Commerce, Hojai College, Assam ____________________________________________________________________________________________

ABSTRACT : Corporation is an integral part of the society. Its development and prosperity depends on

the various stakeholders of the society. The failure or success is totally depends on the society. These

corporate houses receive all the required inputs from the society. Their products or services are too

consumed by the society. This creates an ample scope for the corporate houses to think and act for the

betterment and sustenance of the society and its stakeholders. These Responsibility of Corporate houses

can be termed as “Corporate Social Responsibility”.

CSR in India has been continuously influenced by the different national and international level

guidelines and notification issued by different authorities time to time. However, the guidelines issued

were voluntary in nature. It was not compulsion for corporate house to practice CSR. So, whatever they

were practicing, were voluntary act of the corporate houses. However, the Companies Act, 2013 has

brought a drastic change in the CSR practices in India. The provision of the said Act made CSR

activities compulsory for the certain categories of companies in India. Through the present study

researchers have drawn a comparison of CSR practices of select corporate public sector commercial

banks and private sector commercial banks.

Keywords: CSR,Companies Act, , Guidelines, Society,2013.

___________ _______________________________________________________________________________

I. Introduction:

Corporate social responsibility (CSR) simply refers the responsibility of

corporate houses towards the society. The development and prosperity of a

Corporate houses is very much depend on the society. The existence of corporate

houses is possible only because of other part of the society i.e. the various

stakeholders of the corporate houses. These stakeholders are directly and

indirectly contribute a lot for the sustenance of the corporate houses. The

corporate houses should also responsible for the betterment of the society [1].

These responsibilities of corporate houses can be regarded as corporate social

Responsibility.



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India is a second most populous country in the world [2]. India‟s 22% of

population, that is, 270 million Indians are staying below poverty line [3]. The

government of India has to incur huge amount government investment on the

various welfare activities for the people of the society. It has seen that the

government contribution is not adequate to work out the problems of the poor

people of the society. As a result, the government of India made CSR compulsion

for certain category of corporate houses [4].

Importance of the Study:

CSR is not a new concept to India as well as to the world. Many corporate

houses like ONGC, OIL, TATA, ITC etc has also been practicing CSR activities

in the different names like sustainable development, corporate responsiveness,

carbon emission, green business etc from a long periods. Banking and Financial

institution are not exceptional in this regard. However, the banking and financial

institutions are not directly involved in creation of any social cost like- water

pollution, air pollution ,Global warming etc, but these institutions are also

indirectly involved in creating of social cost by providing finance and supporting

various projects. Various global and National regulatory body issues various

guidelines for the corporate houses regarding their CSR activities. However,

these guidelines and provisions were not compulsion for the Indian Companies.

But introduction of companies Act 2013 brought severe changes to certain

categories of Indian companies towards their social activities. It has seen that,

the private sector corporate houses are also very much conscious regarding their

CSR activities. In this study the researcher has tried to focus the CSR

contribution of both public and private sector corporate houses.

Review of literature:

Singh, N., Srivastav, R., & Rastogi, R. (2013),[5] in their research paper entitled

“CSR Practices and CSR Reporting in Indian Banking Sector” published in

“International Journal of Scientific and Research Publication” have tried to focus

on the major areas of CSR initiatives of the Indian Banks. The Researchers found

that most of the banks are still not disclosing the amount that has spent on their

respective CSR initiatives.



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„Corporate Social Responsibility Practices of Commercial Banks in

Bangladesh: A Case Study on Southeast Bank Ltd.‟ Study undertaken by Md.

Ahmed, K. (2013)[6] has focused on the various CSR practices and the areas of

CSR undertaken by the select bank. He has found that the select bank follows

transparent business practices. Their business practices are based on ethical

values, respect for people, communities and the environment, and compliances

with legal and regulatory requirement. The researcher has also found that the

select bank has spends 2% of their net profit after tax in the year 2012.

II. Objectives of the Study:

The study is carried out with an objective to compare the CSR activities of

public sector commercial banks with private sector commercial banks.

III. Database and Methodology:

The present study is both analytical and descriptive in nature. The sample

units are selected on the basis of judgmental sampling. There are 89 scheduled

commercial banks operating in India as on 31st March‟2013 (RBI, 2013). On 25

th

September, 2013 Bharatiya Mahila Bank got the banking license from RBI with

which total banks increase to 90. Out of 90 banks 27 (including Bhartiya Mahila

Bank and SBI associates) are public sector banks, 20 domestic private sector and

43 are foreign private sector banks. For the purpose of this study, only public

sector and domestic private sector commercials banks have been considered

means 27+20= 47 are the size of the universe. Sample size of the study would

constitute 24 banks, 50% from each sector, i.e. 14 banks from public sector and

10 banks from domestic private sector banks. Banks are selected on the basis of

their ranking in relation to their profits of average six years i.e. 2007 to 2013.

The selected public sector commercial banks are: State Bank of India,

Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank

of India, Indian Bank, IDBI Bank, Allahabad Bank, Corporation Bank, Syndicate

Bank, Oriental Bank of Commerce, Andhra Bank. Indian Overseas Bank.

The selected private sector commercial banks are ICICI Bank, HDFC Bank,

Axis Bank, Kotak Mahindra Bank, Yes Bank, Jammu and Kashmir Bank, Federal

Bank, IndusInd Bank, Karur Vysya Bank, ING Vysya Bank.



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The data that are required for the secondary sources only like Annual Report

of both selected public sector and Domestic Private Sector commercial banks,

websites of the select banks, articles published in the journals and newspapers

and PhD theses etc. The data that has collected from secondary sources are

analysed by using various mathematical and statistical tool. And interpretation is

done accordingly.

IV. Result and Discussion:

Table 1: Gap between the Actual CSR spending and potential CSR spending of the commercial

banks during the financial year 2012-13, 2013-14 and 2014-15

Sector Banks

Gap between the actual spending and potential spending in the year 2012-13 (Rs

Crores)

Gap between the actual spending and potential spending in the year 2013-14

(Rs Crores)

Gap between the actual spending

and potential spending 2014-15

(Rs Crores)

Pu

blic

Sec

tor

Co

mm

erci

al b

anks

SBI -71.25 -78.25 -128.89

PNB -84.906 -90.833 -82.92

BOB -75.06 -84.54 -75.7

Canara Bank -57.57 -56.57 -26.894

BOI -45.05 -44.94 -42.52

UBI -38.39 -36.4488 -24.36

Indian Bank - -31.19 -28.73

IDBI -31.31 -32.37 -7.28

Allahabad Bank - -29.5332 -3.294

Corporation bank -25.13 -27.32 -17.19

Syndicate Bank - - -31.38

OBC -21.28 -18.9 -

Andhra Bank - -23.6 -19.47

IOB - - -14.54

Pri

vate

Sec

tor

Co

mm

erci

al B

anks

ICICI -12.28 -35.05 -8

HDFC -41.27 -35.09 -17.26

Axis Bank -25.21 -32.94 18.96

Kotak Mahindra Bank

-12.34 -18.13 -14.36

Yes Bank -8.05 -7.63 -10.33

J & K Bank - - -4.14

Federal bank - - -9.09

IndusInd bank -2.4 -3.58 -4.27

KarurVysya Bank -8.0807 -9.1475 -8.74

ING Vysya Bank - -6.9 -

Source: Self computed from the Annual Reports (2012-13 to 2014-15) of the select commercial

banks.



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The Table 1 shows the gap between actual CSR spending and potential

CSR spending of the commercial banks during the financial years 2012-13, 2013-

14 and 2014-15. The table reflects the gap between actual and potential CSR

spending for only 16 and 20 commercial banks in the financial year 2012-13 and

2013-14 respectively. Almost all the commercial banks except Oriental Bank of

Commerce from public sector commercial bank and ING Vysysa bank‟s gap

between actual and potential CSR could not be ascertain due non-availability of

data in their respective Annual reports.

The Table 1 also reveals that during the financial year 2012-13 and 2013-

14, none of the banks invested more amount than their potential CSR investment

and in the financial year 2014-15, only Axis bank invested more amount than its

potential CSR investment.

The above stated table also shows that the gap between actual CSR

spending and potential CSR spending of select private sector commercial banks

are lesser than the select public sector commercial banks during the financial year

2012-13, 2013-14, and 2014-15. Through this, it can be inferred that the private

sector commercial banks are more conscious on CSR activities than the public

sector commercial banks before and after the compulsion of CSR as per the

provisions of the Companies Act, 2013.



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Table 2: Percentage of previous year’s Net Profit after tax spent in current year by select

public sector commercial bank during the financial years 2007-08 to 2014-15

Sources: computed from Annual Reports of select public commercial banks of select financial

years

The above Table 2 reveals that percentage of previous year‟s net profit

spent in the current year by the 14 selected public sector commercial banks from

the financial year 2007-08 to 2013-14. Out of 14 public sector commercial banks,

2 banks i.e. Syndicate bank and Indian overseas bank do not disclose their

percentage of previous year‟s net profit in the current financial year in the Annual

Reports of the bank during the periods. SBI is only the public sector commercial

bank which discloses its percentage of previous year‟s net profit in the current

from the first year i.e. 2007-08 of the study periods of the study. Punjab National

bank discloses its percentage of Previous Year‟s net profit in current year from

the financial year 2009-10, whereas Union Bank of India discloses from the

financial year 2010-11. Indian bank, Allahabad bank and Andhra Bank disclose

their percentage of previous Year‟s net profit after tax only in the last year of the

Name of the

bank

YEARS

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

SBI 0.18 0.13 0.22 0.27 0.86 1.05 1.06 1.06

PNB --- --- 0.14 0.013 --- 0.07 0.06 0.11

BOB --- ---- --- ---- --- 0.14 0.34 0.39

Canara

Bank --- --- --- --- --- 0.34 1.46 1.27

BOI --- --- --- --- --- 0.04 0.28 0.43

Union Bank

of India --- --- --- 0.085 0.26 0.069 0.82 0.78

Indian Bank --- --- --- --- --- --- 0.15 0.10

IDBI --- --- --- --- --- 0.005 0.65 2.35

Allahabad

Bank --- --- --- --- --- --- 0.025 0.73

Corporation

Bank --- --- --- --- --- 0.14 0.12 1.10

Syndicate

Bank ---- --- --- --- --- --- --- 0.13

OBC --- --- --- --- --- 0.34 0.57

Andhra

Bank --- --- --- --- --- --- 0.19 0.24

IOB --- --- --- --- --- --- --- 0.04



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study periods i.e. 2013-14. The rest of the Commercial banks i.e. Bank Of

Baroda, Canara Bank, Bank Of India, IDBI Bank, Corporation Bank and Oriental

Bank of Commerce disclose their percentage of previous year‟s net profit after

tax spent in current year from the financial year 2012-13. The highest percentage

of previous year‟s net profit spent in 2012-13 was shown by SBI and followed by

Canara Bank, Oriental Bank Of Commerce, Bank Of Baroda, Corporation Bank,

Punjab National Bank, Union Bank of India and IDBI bank. And the highest

percentage of previous year‟s net profit spent in 2013-14 was by Canara Bank

followed by SBI, Union Bank Of India, IDBI Bank, Oriental Bank Of

Commerce, Bank Of Baroda, Bank Of India, Andhra Bank, Indian Bank,

Corporation Bank, Punjab National Bank and Allahabad Bank.

Table 3: Percentage of previous year’s Net Profit after tax investment in current year by

the select private sector commercial banks from the financial year 2007-08 to 2014-15

Sources: computed from Annual Reports of select private sector commercial banks of select

financial years.

The above table reveals the percentage of previous year‟s Net Profit after

tax spent in current year by the 10 selected private sector commercial banks from

the financial year 2007-08 to 2014-15. Out of 10 private sector commercial

banks, 2 commercial banks i.e. ICICI Bank and Axis Bank disclose their

percentage of previous Year‟s net profit after tax spent in current year from the

Name of the bank

Years 2007-

08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

ICICI Bank 0.34 0.72 0.41 0.15 0.47 1.80 2.02 1.59

HDFC Bank --- --- --- --- -- 0.75 1.05 1.40

Axis Bank 0.37 0.54 0.43 0.32 0.56 0.89 1.01 1.98

Kotak Mahindra

Bank --- --- --- --- --- 0.38 0.27 0.80

Yes Bank --- --- --- --- --- 0.67 0.95 0.97

J & K Bank --- --- --- --- --- --- --- 1.36

Federal Bank --- --- --- --- --- --- --- 0.87

IndusInd Bank

--- --- --- --- --- 1.14 1.20 1.25

Karur Vysya Bank

--- --- --- --- 0.25 0.056 0.12 0.27

ING Vysya Bank

--- --- --- --- --- --- 0.38 ---



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first year of the study periods (2007-08). And two commercial banks, i.e. Jammu

& Kashmir Bank and Federal bank don‟t disclose their percentage of previous

year‟s net profit after tax spent in current year up to 2013-14 and they have

disclosed only from the financial year 2014-15. Karur Vysya bank has disclosed

its percentage of previous year‟s Net Profit after tax spent in current year from

the financial year 2011-12 and ING Vysya bank has disclosed percentage of

previous year‟s Net Profit after tax spent in current year only in the financial year

2013-14 and bank has not disclosed its Annual Report during the financial year

2014-15 as the bank has taken over by Kotak Mahindra Bank. ICICIC bank has

spent the highest percentage of previous year‟s net profit in current year‟s CSR

continuously in 2012-13 and 2013-14. But in the financial year 2014-15, Axis

bank has contributed highest percentage of previous year‟s Net Profit after tax in

current year. The percentage of CSR spending of the private sector commercial

banks from the financial year 2007-08 to 2014-15 can be easily understood with

the help of the following diagram.

Total Amount spending on CSR activities by both public sector commercial banks from

the financial year 2007-08 to 2014-15

Table 4: Total Amount spending on CSR activities by both public sector commercial

banks from the financial year 2007-08 to 2014-15 .

Commercial Banks Amount spend on CSR during the financial year (Rs. Crores)

2007-08

2008-09

2009-10

2010-11 2011-

12 2012-13 2013-14 2014-15

SBI 8.11 8.76 19.72 24.44 71.18 123 148.93 115.8

PNB ND ND 4.19 0.5165 ND 3.244 2.937 3.58

BOB ND ND ND ND ND 6.99 15.3 17.83

Canara Bank ND ND ND ND ND 11.3 41.97 30.396

BOI ND ND ND ND ND 1.1 7.83 11.85

Union Bank of India

ND ND ND 1.76 5.5 1.24 17.8 13.25

Indian Bank ND ND ND ND ND ND 2.42 1.18

IDBI ND ND ND ND ND 0.1053 12.2 26.29

Allahabad Bank ND ND ND ND ND ND 0.2968 8.55

Corporation Bank ND ND ND ND ND 2.13 1.71 6.16

Syndicate Bank ND ND ND ND ND ND ND 2.14

OBC ND ND ND ND ND 3.92 7.59 ND

Andhra Bank ND ND ND ND ND ND 2.4 1.06


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IOB ND ND ND ND ND ND ND 0.25

ICICI Bank 10.7 30 15.3 6.1 23.97 116.56 168 156

HDFC Bank ND ND ND ND ND 39.01 70.37 118.55

Axis Bank 2.46 5.82 7.88 8.05 18.85 42.42 52.45 123.22

Kotak Mahindra Bank

ND ND ND ND ND 4.09 3.63 11.97

Yes Bank ND ND ND ND ND 6.5 12.4 15.64

J & K Bank ND ND ND ND ND ND ND 16.13

Federal Bank ND ND ND ND ND ND ND 7.27

IndusInd Bank ND ND ND ND ND 9.13 12.69 17.54

Karur Vysya Bank ND ND ND ND 1.058 0.2793 0.6425 1.14

ING Vysya Bank ND ND ND ND ND ND 2.35 ND

Sources: Self computed from the annual reports (2007-08 to 2014-15) of the select commercial

banks

The Table 4 shows the total amount spend by the commercial banks from

the financial year 2007-08 to 2014-15. It also reveals that only SBI from the

public sector commercial bank and ICICI bank and Axis bank from private sector

commercial bank disclosed the amount of CSR invested from the financial year

2007-08 to 2014-15.Most of the commercial banks i.e. 20 out of the 24

commercial banks disclosed their amount of CSR investment from the financial

year 2012-13 only. All most all the commercial banks except Oriental Bank of

Commerce from public sector commercial bank and ING Vysya Bank from

private sector have not disclosed their CSR investment in the financial year 2014-

15. The same year CSR became compulsion as per the companies Act 2013 with

effect from 1st April, 2014. However, due to merging of ING Vysya with Kotak

Mahindra Bank, the information related to CSR were not available at disposal of

public in the financial year 2014-15. The amount of CSR spending in Amount

can be easily understood with the help of the following diagram.

V.Conclusion:

Before the introduction of the Companies Act, 2013, none of the regulatory

body has prescribed the amount and the percentage of previous year net profit

after tax to be investing on CSR activities of the corporate houses. As a result,

most of the commercial banks have spent a very small proportion of their

previous year‟s net profit after tax spent on current year CSR activities. However,

most of the commercial banks except SBI from the public sector commercial



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bank, ICICI and Axis bank from private sector commercial banks have disclosed

their percentage of previous year‟s net profit after tax spent in current year CSR

activities from the financial year 2012-13 only. Whereas most of the commercial

banks except ICICI bank have not invested the prescribed percentage of average

three previous years‟ net profit after tax spent on the current year CSR activities

in the financial 2014-15 which is compulsion as per the section 135 of the

companies Act 2013 that should be implement from the financial year 2014-5.

The more number of private sector commercial bank have invested more than 1%

of previous year‟s net profit spent on current year‟s CSR activities than the public

sector commercial banks in the both financial years 2013-14 and 2014-15.

References:

[1] Weforum. (2013). What role should businesses play in society?. Retrieved from

https://www.weforum.org/2013/11/what-role-should-businesses-play-in-society

[2] CIA. (2016). The world factbook. Retrieved from

https://www.cia.gov/library/publications /the-world-factbook/rankorder/2119rank.html

[3] World Bank. (2016). The world bank India’s profile. Rretrieved from

https://www.worldbank.org/en/news/infographic/2016/05/27/india-s-poverty-profile

[4] The Companies Act. (2013). Retrieved from

http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf

[5] Singh, N., Srivastav, R., & Rastogi, R. (2013). CSR practices and CSR Reporting in

Indian Banking Sector. International Journal of scientific and Research Publication,

3(i2), 1-8.

[6] Ahmed, K. (2013). Corporate Social Responsibility practices of Commercial Banks in

Bangladesh: A case study on southeast Bank Ltd. IOSR Journal of Business and

Management, 12(1), 13-18

Nabasmita Bordoloi , Dr. Kalyan Mukherjee

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