A RESEARCH REPORT ON Study of Corporate Social Responsibility in Banking Sectors

IN PARTIAL FULFILMENT FOR MASTER IN BUSINESS ADMINISTRATION Academic session: 2012-13

Gr. Noida

UNDER THE GUIDANCE OF Garima Madan FACULTY MIMT

SUBMITTED BY Ujjwal Kumar MBA133 1115270133 SECTION B

DECLARATION

I hereby declare that the thesis entitled Study of Corporate Social Responsibility in Banking Sectors for the degree of M.B.A in FINANCE is the original record of work carried out by me during the period of my perusal of the course.

Place: GreteNoida Date: Signature of the Candidate

TABLE OF CONTENT

1. Declaration 2. Acknowledgement 3. Executive Summary 4. Chapter-1: Introduction 5. Chapter-2: Literature Review 6. Chapter-3: Research Methodology 7. Chapter-4: Analysis 8. Chapter-5: Findings and Suggestions 9. Chapter-6: Conclusions and Recommendations 10. Bibliography 11. Annexure and Appendices

ACKNOWLEDGEMENT

Pursuit of knowledge when the subject is as vast and dynamic as Corporate Social Responsibility (CSR) is an enriching experience by itself. The project was very challenging to me and initially it seemed quite elaborate to tackle and make the appropriate analysis. But the pursuit was facilitated by a host of people whom I found too willing to help. I derived a lot of assistance from my place of work, study and home. Any emotion of thanks and gratitude would be too little for me to make any justification of the help I received. My very special thanks and regards are owed to Garima Madam, who agreed to be my guide throughout this endeavor. Despite of his very busy schedule, he kept a regular check on my progress, along with his helping attitude and constant encouragement towards my project. I owe my heartfelt thanks and regards to Dr. A.K. Singhal, who was always ready to answer the queries at any time and was a major guiding force for the timely completion of the research.

UJJWAL KUMAR 1115270 133

RESEARCH OBJECTIVES The objectives of the study are: To study the various CSR practices followed by different banks. The project focuses on banks with direct activities. Several criteria were relevant for the selection of sector: A variety of CSR issues that are expected to be relevant for the bank in question (in order to get deeper insight into the CSR aspects relevant for the Indian banking context). The importance of the bank in Indian market. The perception of the CSR behavior of the company in general. To identify the perceptions of the stakeholders to CSR in its process of achieving sustainable development. Analyze to what extent banks with direct activities, a supply chain or investments have developed a policy on Corporate Social Responsibility (CSR), To identify good practices and potential bottlenecks in the implementation of such policy and to support banks in finding practical solutions. The roles that different actors could play in the implementation of a CSR policy.

The project focuses on positive examples and on (potential) bottlenecks and dilemmas which banks (may) encounter when they implement CSR principles in their business. The project aims to make the CSR operational by looking at the practical implications This can give insight to what extent banks can implement the standards of the CSR and where other actors such as governments and NGOs can or should play a role. As benchmarking is not an objective of this research, the findings on the particular banks have been kept anonymous. This research intends to identify practical solutions, e.g. by means of good practices. This approach is chosen to shed light on the Indian perspective on CSR in terms of practices of selected banks which have provided insight into such practices.

EXECUTIVE SUMMARY

Considering the pace with which the changes occur in the world today, it is important for the banks to integrate with the rest of the sectors through flexibility, adaptability and quickness. Business leaders throughout the world are under increasing pressure to make socially responsible decisions even as they comply with legal requirements and generate sufficient profits. Corporate social responsibility (CSR) decisions demand new skills: managers must understand not only the responsibilities demanded of all firms, but also the opportunities they introduce. While the marketplace does not reward all good deeds, thoughtful strategies can increase the likelihood that firms increase their value while creating positive outcomes for society. In this essay, we review the complexity of the issue, the opportunities CSR presents, and one approach to identifying CSR opportunities. In recent times, the issue of corporate social responsibility (CSR) has been given a lot of attention by various stakeholders. CSR is not about charity, but that it belongs to the core business of a company and therefore should be an integral part of doing business. Banks are under increasing pressure from society to take their social responsibility. This is especially so if it concerns banks with a business relation in a developing country, since these banks are more confronted with CSR issues. CSR is a container concept which encompasses many different ecological, social and economic issues.

Corporate

Social

Responsibility

in

Banking

and

Financial

Institutions

The world we live in today is more connected than ever before. The global village that has emerged as a result of the Information and Communication Technology revolution has redefined the way we interact and communicate with each other. The government, businesses and society are much more interactive than in the past. Corporations are more aware of their role towards the society. They are responsible bodies that feel a sense of duty towards commonwealth and the environment. This has come with a growing realization that they, as an integral part of the society, can contribute towards the empowerment and upliftment of the society. Also consumers

and citizens are increasingly playing an important role by their interaction with governments and businesses. This is the foundation thought behind the tripartite golden handshake between businesses, civil society and governments. As business has become increasingly global, the values and principles that guide managers are no longer local. Social activists, investors, accountants, workers, politicians, environmentalists, regulators, and customers in each and every location work to influence managements decisions. Normal business practices in one location can be objectionable to customers and investors in other areas, while labor and environmental principles in one region appear to be protectionist to businesses in other regions.1 Companies would like to do the right thing but seldom have reliable means to choose a direction or level of investment. For most companies, CSR presents complex problems and great opportunities. CSR allows companies to engage in sophisticated non market strategies that can influence customers, regulators, and employees. It also can reveal firm weaknesses. There are no global laws. There is no single right way. Firms must distinguish the legitimate demands of multiple governments, assess the claims of diverse groups, and identify the significant problems they can best resolve. What Counts? Many researchers have looked for the elusive factor that will turn a firms good deeds into profits. The right answer to the question Does doing result in doing well? is It depends. Firms that select a specific type of social or environmental opportunity consistent with their identity and strategy will reap rewards. Firms which make choices based on the most recent request for help or on a particular managers enthusiasm will likely not. The most critical factors in the success of any firms CSR strategy are not about CSR. A successful CSR strategy builds on basics. First, a firm must be viable in order to create an effective, valuable approach to society and the environment. It is unlikely that a good CSR strategy will reverse bad business decisions. Second, firms must meet their legal and regulatory commitments. Compliance is essential. Enrons ethics policies were widely admired, but the company was nevertheless in violation of the law.

Third, firms must meet basic expectations of their industry and the communities in which they operate. A company known for spilling toxic effluent is unlikely to make gains from sponsoring a childrens sports team. Different organizations recommend that firms ask their employees, suppliers, and customers what kind of CSR strategy would be optimal. Engagement with these groups helps managers identify their best strategies in many settings. This is consistent with recent economic theory that makes the case for strategic approaches not only to financial gains, but also to social output. Meeting the demands of disparate social agents disperses the energy and creativity of the firm. Deliberate, strategic choices maximize social effectiveness and firm opportunities. Financial institutions can choose to play another, powerful role: increasingly often, they determine whether new initiatives carry more social and environmental risks than potential economic benefits. Good analysts will be able to see the ways in which future growth prospects are enhanced or reduced by the social and environmental characteristics of the firms and projects they finance. Financial analysts and investors now recognize that a firms ability to work with indigenous people and their property rights is critical to the success of new mineral extraction projects. Corporate finance professionals in banks like HSBC know that their sustainability principles must be factored into their investment decisions and growth forecasts.The special role of the financial industry is apparent in the appearance of two CSR codes focused solely on finance. The Equator Principles and Principles for Responsible Investment both offer guidance to finance professionals who are faced with projects of great potential value and risk. Financial professionals who identify a broader set of risks and rewards will be more effective. The best business opportunities lie in the area where a firms unique resources and skills match social and environmental gaps or needs. Competitive advantage does not emerge from compliance with the law, from tackling systemic issues single-handedly, or from meeting the demands of civil society. Each of those must be addressed as distinct ways of doing well. Compliance issues are the most straightforward: Noncompliance is too risky for most businesses. Choice issues are more complex. What are the social norms? Are there any rankings or indices that give firms information about their competitive position with regard to the issues? What kind of identity does the firm wish to project? What can it afford? 8

Structural issues demand the alignment of firms, governments, industries, and/or civil groupings. Each structural problem identified demands the formation of a working group or coalition. A firm can then ask if the potential benefit to a resolution warrants participation in such a group.

Finally, strategic opportunities can be evaluated for their potential benefit to the reputation, position, or profits of a firm. Their implementation can be assessed through the same processes as are used for other business strategies.

For our research purpose, Corporate Social Responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time". The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law. A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a broader view of its responsibilities that includes not only stockholders, but many other constituencies as well, including employees, suppliers, customers, the local community, state, and federal governments, environmental groups, and other special interest groups. The aim of this research is to study the various CSR practices followed by different Indian banks and to identify the perceptions of the stakeholders to CSR in its process of achieving sustainable development. Based on the literature review on the topic Corporate Social Responsibility in general, the various CSR practices followed by different Indian banks were studied, which comprise the first part of the thesis. A positive approach was chosen and self-administered questionnaire has been developed. These questionnaires were given to the employees in different Indian banks. The detailed discussion of the research method can be found in the third chapter.

Publicly available secondary data from books, articles and journals, websites and primary data is used for the research. Because the data obtained this way, in both the cases are based on official company disclosures, for which company are held legally liable, it is assumed that the data point obtained from this way is just as accurate as from having received it as part of the filled questionnaire.

The latter part of the thesis covers up the summary of findings and discussions of the data analyzed. The last part of the thesis includes conclusions, suggestions and study implications along with the suitable articles put as appendices.

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CHAPTER 1 INTRODUCTION

1.1 CORPORATE SOCIAL RESPONSIBILITY CSR can be described as an approach by which a company does the following: Recognizes that its activities have a wider impact on the society in which it operates, and that developments in society in turn impact on its ability to pursue its business sustainable. Actively manages the economic, social, environmental and human rights impact of its activities both locally and across the world, basing these on principles which reflect both international values and the organizations own values (ethics), reaping benefits for both its own operations and reputation as well as the communities in which it operates. Seeks to achieve these benefits by working closely with other groups and organizations local communities, civil society groups, other businesses and home and host governments. CSR is generally seen as the business contribution to sustainable development which has been defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs", and is generally understood as focusing on how the Corporate Social Responsibility is the concept according to which the corporation has to undertake the responsibility of their activities affecting the society at large. The economic globalization resulted in a demand for corporations to play a central role in efforts to eliminate poverty, achieve equitable and accountable systems of governance and ensure environmental security. There was a need to make business a part of society and to maximize positive benefits that business endeavor can bring to human and environmental well being and to minimize the harmful effects of irresponsible business. The scheme which was developed from this concern is known as the Corporate Social Responsibility. In India, concept of three bottom lines has been introduced in this regard. The growth in public expectations and the commitment to its stakeholders in its business operations makes the banks compulsory to implement CSR. The concept of corporate social responsibility, linked with the sustainability of these operations is recognized not only as a necessity but also for developing systems to

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manage implementation and systematically assess and report on progress relative to those commitments. Socially responsible investing is required to be practiced by the banks, which is about combining the urge to make money with social and ethical objectives. Thus, socially responsible investors aim to make banks more accountable not only to shareholders and employees but also to all those affected by its operations, including future generations. The degradation of environment and the environmental hazards like global warming, increase in the pollution due to various acts of the banks due to industrial and factory Work increasing day by day. There is a need to introduce methods to keep a check on these activities of the banks. Apart from environmental concern, various other activities can be taken down for the benefit of the society. This check and support mechanism can also be initiated by the financial sector which plays indispensable role in promotion and working of the corporate sector. Apart from various banks, the financial institutions should also carry the social responsibility. The need for sustainable developmental efforts by financial institutions in India assumes urgency and banks, in particular, can help contribute to this effort by playing a meaningful role. The financial institutions have realized their responsibility and they are practicing it also. Initiatives are taken in international level; the best example can be the introduction of Equator principle by FCI. Various banks like HDFC, SBI, ICICI are showing concern in child welfare, poor welfare and employee benefit schemes. Banks like HDFC, SBI, ICICI, Standard Chartered Bank are now active in a host of areas including primary education, women empowerment, rehabilitation of poor, and aged

1.2 NEED OF CORPORATE SOCIAL RESPONSIBILITY The concept of corporate social responsibility (CSR) is not new to Indian banks. However, what is new is the way it has caught on with banks in India and the direct involvement of employees in implementation of these projects. Dedicated departments in most banks are looking into much more than just funding or getting involved in one-time projects. CSR activities have their advantages. The benefits are in terms of building a positive image, encouraging social involvement of employees, which in turn develops a sense of loyalty for

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the organization. CSR activities help bond employees as a team and with the organization, which, in turn, helps in creating a dedicated workforce that is proud of its employer. 1.3 RELEVANCE OF THE TOPIC STUDIED Corporate social responsibility (CSR) is a concept that suggests that commercial corporations have a duty of care to all of their stakeholders in all aspects of their business operations. CSR is closely linked with the principles of Sustainable Development which argue that enterprises should be obliged to make decisions based not only on financial/economic factors (e.g. Profits, Return on Investment, dividend payments etc.) but also on the social, environmental and other consequences of their activities. The benefits of CSR to businesses vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g., Deming's Fourteen Points, balanced scorecards). Orlizty, Schmidt, and Rynes found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy. The definition of CSR used within business can vary from the strict "stakeholder impacts" definition and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or PR departments of a company, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Progressive banks do not have a CSR department or function at all -- the concept is so ingrained in the company itself that employees implement the company's values directly. Role of Corporate Social Responsibility in Human Resource Management Corporate Social Responsibility can be an important aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits are increasingly likely to ask about a firm's CSR policy during an interview and having a comprehensive policy can give an advantage. CSR can also help to build a "feel good" atmosphere among existing staff, particularly when they can become involved through payroll giving, fundraising activities or community volunteering.

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Risk management Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks. Brand differentiation In crowded marketplaces banks strive for 'X Factors' which can separate them from the competition in the minds of consumers. Several major banks, such as The Co-operative Group and The Body Shop are built on ethical values. Banks being the major service organizations can benefit a lot from building a reputation for integrity and best practice. License to operate Banks and other corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity or the environment seriously and so avoid intervention. This also applies to firms seeking to justify eye-catching profits and high levels of boardroom pay. Those operating away from their home country can make sure they stay welcome by being good corporate citizens with respect to labor standards and impacts on the environment. Critics of CSR will attribute other business motives, which the banks would dispute. For example, some believe that CSR programmes are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. Some that have been accused of this motivation include British American Tobacco (BAT) which produces major CSR reports and the petroleum giant BP which is well known for its high profile advertising campaigns on environmental aspects of their operations.

The significance of CSR is a matter of debate today. The critical issues in the debate on CSR centers around the definition of the boundaries or the extent of the activities, the

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scope for evaluation or setting standards, as well as the scope and limitations of voluntary action, through a management initiative. The CSR is implemented for the benefit of the stakeholders. But the benefits that are being arisen from the CSR cannot be implemented without neglecting it disadvantages.

CONS of CSR Shareholders put their risk capital in a Joint Stock Company (or business) and therefore, banks should be managed in the interest of the owners or the shareholders. This primacy of treatment given to the shareholders is being justified on the grounds of ownership and shareholding. It is felt that maximization of profits or the bottom line should be the ultimate objective of the management. Developing corporations argue that practicing and following CSR is matter of concern for banks having big business with lot of resources at their disposal. It is argued that CSR is the responsibility of the politicians. Its not business role to get involved. Business has traditionally been beyond morality and public policy.

1.4:INDIAN FINANCIAL SETUP AND THE CONCEPT OF CSR Financial sector is considered to be a very indispensable part of our country. Financial institutions act as a medium for the transfer of resources from net savers to net borrowers. It is a major source of long- term funds of the economy. The Government of India, in order to provide adequate supply of credit to various sectors of the economy, has evolved a well developed structure of financial institutions in the country. At the national level, they provide long and medium term loans at reasonable rates of interest. They subscribe to the debenture issues of banks, underwrite public issue of shares, guarantee loans and deferred payments, etc.

1.5:IMPLEMENTATION OF CSR BY INDIAN FINANCIAL INSTITUTIONS In the Indian context, very little systematic documentation of CSR initiatives is available so far. One such study was done by Business Community Foundation for TERI (The Energy and Resources Institute). Some of the findings of the study are as follows: (1) Serious and committed approach to CSR is increasing its reach, but there is vast ground yet to be covered. (2) Collaboration work between banks & NGOs is increasing. (3) Corporate are realizing that Good for business is good business. 15

(4) Most interventions so far philanthropic in nature, rather than strategic.

Some guidelines as plan of action are proposed by the Reserve Bank of India in this aspect. The substantial financing is said to be increased. Sustainable finance is financing that places importance on the environmental and social consequences of projects and financial products, rather than just the economic impact. The financial institutions have to see the environmental and social sustainability of the projects of the company, coming for financing. Social Responsibility of the banks and firms should be acknowledged.

In the financial sector too there is a visible trend to promote environmentally and socially responsible lending and investment in emerging markets. Banks are beginning to recognize that they have a social responsibility to fulfill as they emerge from the shadow of traditional banking. Responsible banking is the new approach born out of the new market realities. Banks need to examine the effects of their lending and investment decisions. Banking and finances immediate environmental and social impacts are relatively low because most of those impacts are delivered through the activities of other businesses that rely on financial institutions the businesses in a loan or investment portfolio. However, despite the relatively indirect nature of their environmental and social impacts, banks need to examine the effects of their lending and investment decisions. Incorporating environmental and social criteria into business decision-making can reduce the impacts of operating activities. Therefore, financial institutions that implement strategies incorporating environmental and social issues in lending and investment should be able to better assess, mitigate, document and monitor risks associated with financing and investment. Such strategies can be implemented by financial institutions by adopting the approach of sustainable development. Banks should make sure that the banks for which they are financing or investing incur the risks that the impacts due to their anti-environmental acts create can be legal, financial, and reputational, and banks themselves are increasingly accountable for the effects their portfolios have on the environment and society. The costs that can be incurred by a business operating without regard to environmental and social issues include: Pollution clean up costs Fines increased waste handling costs Costs from damaged assets with reduced value Legal claims 16

 Regulatory delays reduced public regard, and reduced sales The risks that often get transferred to financial institutions include: increased loan defaults decreased value of investment and loss of collateral due to decreased asset values Liability for damages arising from negligent investment advice Loss of reputation and standing as a result of association with polluting businesses As an important player in the Indian economy, the Banks realize that its role should extend beyond the commercial sector to include the social sector as well. It, therefore, aims to participate in the all round development of the country by focusing on some of its fundamental needs. The Bank seeks to perform this role primarily as a funding agency, through a dedicated not-for-profit group, the Social Initiatives Group (SIG). ICICI Bank has joined hands with NGOs to reach out to children in ten states helping them have better access to education; As a large participant in the financial system, it lies in the longer-term interests of the Bank to actively contribute in bringing the above to fruition. The financial sector seeks in this regard, to improve the poorer section of the country so as to participate in socioeconomic processes. The group seeks to achieve its mission by supporting initiatives that are (1) Cost effective; (2) Measurable; (3) Capable of large-scale replication and (4) Have the potential for both near and long-term impact. In pursuit of its goals, the SIG seeks to work actively with research agencies, NonGovernmental Organizations (NGOs), corporate, government departments, local stakeholders and international organizations. It should also be noted that the group believes modern technologies; particularly Information and Communication Technologies (ICT) can prove to be important facilitators if used appropriately. Community Services Banking is one of the instruments through which, the bank plays, the role of a responsible and responsive corporate citizen. The Bank was among the first to accept, as part of its corporate philosophy, that human and financial resources at their command should be mobilized in discharging the social role. The two dimensions of their social role are:

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A) The Bank as a corporate citizen, with resources at its command and the benefits it derives from operating in the society in general, owes a solemn duty to the less fortunate and underprivileged members of the same society. B) Another dimension is the contribution the staff members are expected to make by understanding the urges and aspirations of the public around them. The concept of Community Service Banking (earlier known as Innovative Banking) is Australia's first and specialist banking service exclusively for not-for-profit organisations, their staff and community sector enterprises; refer http://www.csbanking.com.au/. But now this has been widely used by Indian banks also.

PROBLEMS IN IMPLEMENTATION OF CSR BY FINANCIAL INSTITUTIONS Main problems or disadvantages of corporate social responsibility with regard to corporations are same with that of banks or financial institutions as well. Many-a-times CSR is practiced by the banks only to make their reputation good and so that more and more people chose them to invest their money. There can also be problem with regard to the follow up of the Equator principles. These principles require the mutual compliance of the host country laws with the IFC or World Bank standards. In India the environmental aspects of project finance deals are governed primarily by environmental legislation of the Ministry of Environment and Forestry (MoEF) and the Central Pollution Control Board (CPCB).A project developer is required by regulation to undertake an Environment Impact Assessment (EIA) in order to obtain Environmental Clearance, which is the major prerequisite for starting projects and thus is demanded by banks in all project finance deals in India. For the project approval, the National Environmental Policy and a set of Acts, Rules and Notifications, related to water pollution, air pollution, hazardous substances management, eco-sensitive zones and environment protection are to be followed. The project is to approved only when it passes various clearance requirements. The standards are set by the Central Pollution Control Board of India. The regulatory authorities (Ministry of Environment & Forest and State Level Impact Assessment Authority) are responsible for monitoring the compliance of the project activities. Indian regulations are very specific and provide detailed accounts of the activities to be carried out, the procedures.

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There are detailed and unambiguous laws to be complied with, but the problem is these laws are not complied with by the authorities in a responsible way. The main problem is the corruption and money-mindedness of the people. Although the process appears sound, there are loopholes in implementation.

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CHAPTER-2 LITERATURE REVIEW 2.1 INTRODUCTION Responsible Business (what some call Corporate Social Responsibility, CSR, Sustainability or good Corporate Citizenship) is increasingly seen as just commonsense good business, for larger banks around the world. Some refer to a commitment to a triple bottom line which measures results in terms of People, Profit and Planet; or being a good Corporate Citizen. In essence, we are talking about a business which is seeking to minimize its negative environmental and social impacts and to maximize its positive impacts. Negative impacts might include: a poor work environment (bullying, favoritism, high accident rates etc) or undertaking hazardous activities near a residential area. Positive impacts could include: incorporating energy efficiency into the design of new products and buildings; reducing excess packaging; ensuring that people of any faith or background are comfortable working in the business. It is just as relevant for smaller firms too. Nowadays, for businesses large and small, the issue is less why do it? and much more about How? How to integrate responsible business practice, so that, it is built-in to purpose and strategy rather than, being a bolt-on to business operations. 2.2WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

CSR is the acknowledgement by banks that they should be accountable not only for their financial performance, but for the impact of their activities on society and/or the environment. Discussions surrounding the concept are still at an evolutionary stage, although the principles of CSR have long been part of business strategy. Business is already accountable for its activities over the diverse strands that now come under the 'CSR' umbrella, such as human resources and environmental issues, sustainable development, waste management, health and safety practices, through a wide range of existing guidelines at the national, EU and global levels. But it is important to distinguish between these base-line standards and CSR activity, which is voluntary, business-driven and often goes well beyond what is required by legislation.

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Your business doesnt exist in isolation, simply as a way of making money. Your employees depend on your business. Customers, supplies and the local community are all affected by you and what you do. Your products, and the way you make them, have an impact on the environment. Corporate Social Responsibility takes all this into account. It isnt about being right on or mounting an expensive publicity exercise. It simply means taking a responsible attitude, and following simple principles that apply whatever the size of a business. Every business should be interested in CSR. Its a win-win situation, society benefits and so does the business. For example, reducing waste, helps the environment, cuts the material costs and makes the products and services attractive to green or ethically driven consumers. Treating customers fairly makes them want to do business with the organization. Corporate social responsibility (CSR) is also often referred to as business responsibility and an organizations action on environmental, ethical, social and economic issues. CSR can be described as an approach by which a company does the following: Recognizes that its activities have a wider impact on the society in which it operates, and that developments in society in turn impact on its ability to pursue its business sustainable. Actively manages the economic, social, environmental and human rights impact of its activities both locally and across the world, basing these on principles which reflect both international values and the organizations own values (ethics), reaping benefits for both its own operations and reputation as well as the communities in which it operates. Seeks to achieve these benefits by working closely with other groups and organizations local communities, civil society groups, other businesses and home and host governments. Corporate social responsibility is necessarily an evolving term that does not have a standard definition or a fully recognized set of specific criteria. With the understanding that businesses play a key role on job and wealth creation in society, CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental, and social imperatives while at the same time addressing shareholder and stakeholder expectations. CSR is generally accepted as applying to firms wherever they operate in the domestic and global economy. The way businesses engage/involve the shareholders, employees, customers, suppliers, governments, non-governmental organizations, international organizations, and other stakeholders is usually a key feature of the concept. While business compliance with

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laws and regulations on social, environmental and economic objectives set the official level of CSR performance, CSR is often understood as involving the private sector commitments and activities that extend beyond this foundation of compliance with laws. From a progressive business perspective, CSR usually involves focusing on new opportunities as a way to respond to interrelated economic, societal and environmental demands in the marketplace. Many firms believe that this focus provides a clear competitive advantage and stimulates corporate innovation. CSR is generally seen as the business contribution to sustainable development which has been defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs", and is generally understood as focusing on how to achieve the integration of economic, environmental, and social imperatives. CSR also overlaps and often is synonymous with many features of other related concepts such as corporate sustainability, corporate accountability, corporate responsibility, corporate citizenship, corporate stewardship, etc. CSR commitments and activities typically address aspects of a firm's behavior (including its policies and practices) with respect to such key elements as; health and safety, environmental protection, human rights, human resource management practices, corporate governance, community development, and consumer protection, labor protection, supplier relations, business ethics, and stakeholder rights. Corporations are motivated to involve stakeholders in their decision-making and to address societal challenges because today's stakeholders are increasingly aware of the importance and impact of corporate decisions upon society and the environment. The stakeholders can reward or punish corporations. Corporations can be motivated to change their corporate behavior in response to the business case which a CSR approach potentially promises. This includes: 1. stronger financial performance and profitability (e.g. through eco-efficiency), 2. improved accountability to and assessments from the investment community, 3. enhanced employee commitment,

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2.3. Operational CSR aspects Definition The term operational aspects is included in the CSR. It refers to the following principles which a company should adhere to in order to fulfill its social responsibility and to give account about its practice: Development of CSR policy Supply chain responsibility Stakeholder involvement Transparency and reporting Independent verification CSR is not a common term. One large company prefers sustainable development or sustainable business. Several Indian banks talked about responsible business or Triple P (People, Planet, and Profit).

According to SBI: Sustainable development implies optimizing financial position while not depleting social and environmental aspects and CSR implies supporting issues related to children, women and environment. This company refers in its definition of CSR to community development. In the Western context community development is often seen as charity. In the Indian context it is seen as a large responsibility of a company, not only by stakeholders but also by the local Indian management. The background of this is that stakeholders see the large western banks as capitalist islands in a developing country. This position gives them a certain responsibility towards the community.

2.5. Development of CSR policy The operational CSR mentions several aspects which play a role in the development of a CSR policy. Assess CSR risks This seems to be the first logical step to develop a CSR policy: banks should assess which CSR risks are at stake with respect to the its activities, its supply chain, the country and the

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region where it operates. CSR assessment should also relate to the impact of the marketing of the product on the local market. Activities It is not clear to what extent banks perform CSR impact assessments of their production processes and their products, because not so much information is obtained on this issue. It seems that banks that have not formulated a CSR policy have, among others, refrained from doing so because they are not aware of, or possibly ignore, the CSR risks at stake. For banks that do have a CSR policy the development is a continuous process, many times initiated by public pressure or requirements of clients. Several examples of good practice were found: One large MNC makes use of environmental, social, health impact assessments of the World Bank. On the basis of these assessments recommendations are made on whether or not and how to take part in a project. After negative publicity with respect to one of its financing activities a bank decided t o involve NGOs on CSR aspects because it needed external expertise. One could argue that it should have involved these NGOs beforehand but this incident gave rise to develop a CSR policy on other investment areas as well.

Environmental CSR Environmental CSR aspects are categorized as follows: General environmental principles, referring to Principle of preventive action Precautionary principle Rectify environmental damage at source Polluter pays principle Greater environmental responsibility Environmental friendly technologies Biodiversity Energy, material and water use Emissions, effluents and waste . 2.6. Preservation of biodiversity Within the context of this project preservation of biodiversity is defined as policy aiming at the decrease of the direct and local caused impact on specific (geographic) defined 24

ecosystems. By means of this definition biodiversity is distinguished from so-called grey environmental issues, such as litter or the greenhouse effect, even though there is an indirect relationship between the green and grey issues. Furthermore, biodiversity affects the activities of all banks in one way or another. Biodiversity can be influenced both negatively and positively through the activities of banks. Land conversion One of the most important causes of loss of biodiversity is the conversion of natural areas into production areas, e.g. conversion of forests into agriculture. Negative conversion should therefore be an important issue in the CSR scans or risk/impact assessments of banks. Starting point is the extent to which an area is influenced by human being, which can vary from a pristine ecosystem to systems in which the presence of human beings is very dominant. When a company analyses the impact on land conversion it should also look at the history of the production area in order to prevent future conversion or to stimulate compensation for negative land conversion. In that way positive conversion is also possible.

Land use Another important issue is the amount of land or water which is necessary in order to produce a certain amount of product (productivity/acre). The higher the productivity the less space is required, which is better from the perspective of biodiversity. However, land use might frustrate other biodiversity aspects; for example, biological production methods have a positive impact on biodiversity from most perspectives, but usually require higher land use than intensive agriculture, because the productivity per acre is lower. In the long run, however, productivity of biological production methods might be higher, because soil does not get degraded so fast. In order to optimize the overall performance in the field of biodiversity a company needs to seek a balance between land use and habitat degradation. Some banks give money to the banks involved with agriculture (food, seeds and tea) make use of intensive systems, which may in the short term be positive from the perspective of land use. Industrial banks use land as well. There is a tendency to convert land from agricultural land to industrial areas. The Indian government also promotes location of Multinational banks in backward areas by means of all kinds of concessions.

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Disturbance of flora and fauna Plants and animals can be disturbed in their natural environment by noise, light, odor, hunting or by human presence. This can result in disturbance of the eco-system. Banks can also contribute to conservation of natural elements in production areas.

Over-exploitation This is an issue when more animals and plants are harvested from the wild than can be supplemented by means of reproduction. While food processing and seed producing banks say they instruct farmers on the need to rotate their crop, a research institute observed a negative impact on biodiversity, such as decline of soil fertility and the fact that soil becomes prone to pest and diseases. Apparently not enough measures are taken to countervail the negative influence on biodiversity. Other issues Banks might perform activities which are essential for the preservation of biodiversity. They can also offer compensation if it is not possible to completely reduce the biodiversity impact of its activities. Another more indirect contribution is possible by means of active dissemination of knowledge on best practices.

2.7. Legislative framework Also within the Indian legislation the focus is more on the use and exploitation of biological resources rather than on their conservation. According to a stakeholder there is a great need for a comprehensive biodiversity strategy and action plan in order to assess the current state of Indias biodiversity and develop mechanisms, guidelines and concrete steps to implement this strategy. 2.3HOW AND WHY IS CSR RELEVANT? As CSR is all about values and accountability then it is also about the behavior of your people and the behavior of your suppliers. In this sense virtually everything that is found within the HR remit - from training, recruitment, staff retention, policies, procedures and strategy involves CSR. Traditionally HR and CSR have been led by the need for compliance and keeping up with new laws on employment as well as environmental, ethical and social issues. Increasingly HR

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managers are crucial to the delivery of training to deal with these issues in terms of organizational objectives and strategy. Equally important is the importance CSR has to recruitment: 75% of UK professionals take social or ethical considerations into ac\count while changing employment. Whilst over half of graduates will not work for banks they believe to be unethical. Corporate governance is a board level hot topic - you only have to look at how much publicity the Higgs report on the role of non-executive directors received and it will continue to develop, as there is increased recognition that how an organization is run is the key. This can cover many areas such as financial integrity, transparency and accountability, leadership from the board and being employer of choice. Excellent responsibility management is central to the implementation of policies and programmes. Having good corporate governance means, that, these areas are embedded in the organization and deliver to the business and to stakeholder objectives, and are not just nice-tohave. The HR manager has become central to this role in helping deliver culturally open and transparent organizations where dialogue is celebrated not feared. For a business being CSR compliant is also an exercise in future-proofing its business as risks and opportunities are identified. Quite often changes lead to performance improvements such as increased staff retention and customer satisfaction. Adding this value is one of the main reasons why CSR is of increasing relevance to the HR manager. CSR is a crosscutting topic under which numerous issues can be grouped including training and education, capacity building, leadership, health and safety, working conditions, human rights, stakeholder engagement and corporate governance. Large multi-national banks were the first to identify CSR as a potential tool to improve performance and now through their supply chain they are asking suppliers to comply with their standards. Corporate social responsibility activities in most organizations are much more than a brandbuilding effort. CSR activities have their advantages. The benefits are in terms of building a positive image, encouraging social involvement of employees, which in turn develops a sense of loyalty for

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the organization. CSR activities help employees bond as a team, and with the organization, which, in turn, helps in creating a dedicated workforce that is proud of its employer. The trend is especially strong in Banks and IT banks with a young workforce that increasingly feels that they would like to contribute to the cause of creating a better society. Most of these banks are working on issues related to children and education. Voluntarism to them means taking technology to the grassroots levels and to bridge the digital divide. Whether it is TCSs Web-based solution for their adult literacy programmes or Kale Consultants (an airlines and banking verticals software maker) effort in creating a centralized data system on children for adoption, CSR has proved its relevance. With serious money and human resources involved how does it benefit the organization? It is not uncommon to hear of rumors that in many cases no actual work was done and projects were shown on paper to gain tax exemptions. Most organizations, however, vehemently deny such allegations as funds are strictly dedicated to such projects and monitored by company boards. CSR is increasingly becoming the part of corporate governance. Yet another allegation is that CSR is just a brand-building exercise. Getting associated with a cause might create an apparent impact, but that does not generate any tangible profits for the organization. While it does help develop their brand and convey to the public that it is a socially conscientious company, it is a natural fall out and not a deliberate attempt. Canara Bank believes that organizations today cannot have a how I can benefit attitude as employees are sensitive on such issues. However, one of the biggest advantages of such activities is the creation of an internal brand among employees. Employees feel a sense of pride when they are involved in such activities which, in turn, help in retaining them. Similarly, such activities also in a small way contribute towards image building, says Ms. Anchan Khanna, HR manager Kotak Bank. Besides, with hectic work schedules, these activities help in de-stressing employees and create a much involved and a conscious person. As Ms. Anchan Khanna, Senior HR Manager, Kotak Mahindra Bank says, Getting involved in CSR is like an investment for us. There is no direct benefit out of it. But it shows the way

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an organization is growing. She does believe that such activities create a feeling of credibility. According to Punjab National Bank- at an individual level these initiatives help in leadership and character building among employees and at the company level, social recognition. Many feel that such activities help in creating a value system for the organization. 2.8 REPORTING AND VERIFICATION

Most enterprises engaging in CSR activities communicate to stakeholders and others in a variety of ways, many of which have proved successful and beneficial. Reporting enhances transparency and can be the basis for constructive dialogue with other parties. Some banks use global reporting frameworks and a more limited number also use internal or external verification to evaluate the implementation of their CSR policies. Verification and reporting can be useful management tools, but they are not essential to CSR and the absence of such procedures does not indicate the absence of good practice. Especially in the case of smaller banks, verification and reporting can be burdensome, and the value they add has to be balanced against their cost. Attempts to harmonize reporting standards are likely to have limited impact because of the diversity of enterprises and their CSR activities and the fact that banks have different target audiences. Since each company is communicating with a unique audience, it is reasonable to expect that CSR reports will reflect that diversity and contain different types of information 2.9 NATURE OF CSR CHALLENGES AND OPPORTUNITIES

There is increasing focus on both the private and public sectors to be proactive in the area of CSR. Various challenges are emanating from consumers, shareholders, non-governmental organizations, international organizations, and other stakeholders. These challenges are increasingly recognized in public policy debates as well as in the marketplace by banks and industry sector associations and they are frequently recognized as opportunities. Stakeholders challenge corporations to play social responsibility roles - at both the domestic and international levels. Challenges usually focus on one or more elements of CSR such as environmental protection, health and safety, corporate governance, human resource management practices, human rights, community development and consumer protection. In

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many cases, the challenges are framed in an incremental way and on other occasions the challenges are spelled out in a more comprehensive and overarching manner. The challenges often call for voluntary actions by businesses to demonstrate responsible behavior and effective responses to social and environmental problems - both in the domestic and international contexts. The demands also call upon the public sector to reinforce corporate leadership and to use other policy tools such as economic and regulatory instruments to encourage CSR. The challenges for action can differ considerably from one stakeholder group to another. For example, the demands can range from a call for more disclosure of information to demands for improved stakeholder involvement to requests for changes in management practices to proposals for altering the relationships between company directors, business managers, auditors, shareholders, debt holders, employees, suppliers, customers, community members, and other stakeholders. Some of the challenges are oriented to the ways that businesses manage their internal operations such as human resources management while others are directed at the ways that a business interacts with the rest of the community and society (e.g. human rights, consumers, and supplier relationships). 2.10 CSR TOOLS Banks interested in advancing corporate social responsibility and in improving their social and environmental performance as part of their business have a wide range of tools available for application. Tools can vary widely in terms of objectives, scope, costs, and level of formality, partnerships, extent of stakeholder involvement, and many other characteristics. Tools can be applied to one or more of the planning, implementation, checking, and improvement facets of corporate operations. Businesses have options in how they can use the tools. For example, banks can use the tools that have been developed by others or they can develop their own tools - either independently or in partnership with other stakeholders.

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2.11 NEED FOR CSR

Business and CSR Enterprises are an integral part of society, producing the goods, services and employment that people need, thus stimulating economic prosperity and enhanced quality of life. Their primary objective is to achieve an adequate return on the investment made in them, without which they cannot survive and create new jobs. Corporate social responsibility is a means by which enterprises affirm their principles and values for themselves and for external organizations. Many aspects of CSR have been part of business activity for a long time, well before the current debate began. In undertaking CSR, enterprises add value to their business by, for example, responding to consumer expectations and societal needs, attracting and retaining employees, while enhancing their brand and reputation in the eyes of their customers and other stakeholders. CSR is thus closely linked to competitive advantage. It involves the integration of the principles and values of the enterprise in its internal methods and processes, as well as in its interaction with stakeholders and others. The wide variety of ways in which banks implement CSR policies and initiatives reflects the many different characteristics of the enterprises involved. Some enterprises go even beyond their responsibilities and engage in such activities as new product development, innovative pricing strategies, or philanthropic activities in order to provide vital support to people in need.

The role of government It sometimes appears that CSR is treated as a means to get enterprises to address a wide range of issues in society that are the responsibility of other social actors, principally governments. CSR can never replace the governments role in implementing and enforcing legislation. It is vitally important that governments be effective in enforcing national legislation all through their territories, creating a framework through which CSR can flourish. CSR should never be considered as an alternative to good governance. Governments should continue to respect the voluntary nature of CSR.

CSR is voluntary, flexible, and respects diversity Enterprises, as corporate citizens, need to conduct themselves ethically. Like other citizens, they have an obligation to respect the laws of the land. CSR has to remain a voluntary means at the disposal of enterprises to go beyond compliance with national law to make a positive 31

contribution consistent with their role in society. In order for enterprises to engage in it in a meaningful way, it is important

that they be allowed to fit CSR into their own particular culture, operational styles and needs. Also, the extent to which individual enterprises engage in CSR will depend on their own particular circumstances and the same expectations cannot be placed on every enterprise. CSR should therefore remain voluntary and flexible. Issues of compliance should refer to respect for national laws and regulations, and not to CSR.

The role of banks Respect by enterprises for national laws and regulations is an obligation; CSR is no substitute for it and cannot be incompatible with it. There is a wide range of CSR activities which banks successfully engage in, and it would be of value to others, to share experiences in implementing and reporting. Some banks define their CSR strategies in dialogue with external partners, while others do not; in either case, the responsibility for those strategies remains with the enterprise. In their relations with stakeholders such as workers organizations and NGOs, they should help their dialogue partners to understand the limitations of CSR and to manage their expectations in that regard. The role of national employers organizations Employers organizations are in a privileged position to affirm the content and the limits of CSR to reflect the diversity of enterprise circumstances, and to lead business participation in the CSR debate. They can also provide a forum for the debate on the part of enterprises and a platform to exchange experience and good practice between enterprises. They are also in a good position to communicate the positive aspects of CSR from a broad perspective to other participants in the dialogue. This is important especially to those whose CSR focus is about finding fault with enterprises. It may also be useful in certain circumstances for employers organizations to assess, on behalf of their members, the representative ness of others who engage in the debate and the legitimacy of their demands, and to communicate more actively with the public in general, in order to achieve a better understanding of the role of the business enterprise in society and the nature of CSR.

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2.12Social CSR aspects

Introduction Within the context of this project we define social CSR aspects as follows: Human rights Labor Consumer protection Respect for national sovereignty and local communities

Human rights The issue of human rights forms a dilemma for banks. Those banks with a code of conduct have incorporated respect for human rights in it. They see their responsibility in this field however limited by the legitimate role of business, meaning that banks should not interfere with the politics of the (host) country. Expectations of stakeholders An Indian human rights organization attributes the a-political position of banks to their economic interests. Banks are afraid that if they stand up against the government their business operations will be negatively affected. According to this organization it is however in the economic interest of these banks to speak out: security and productivity of the company are affected by a continuation of social unrest in Gujarat, exports get affected, and an explicit position can have a positive rub-off on public perceptions. Therefore banks should maximize profits without compromising on issues like peace and justice. (NGO)

Role for governments Banks presume a large role for governments and international institutions. This was demonstrated by a bank which indicated that it cannot define in advance what country or region cannot be financed.

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Sector specific findings Human rights seem to be mainly a concern for the banking sector and banks which activities have a large impact on local communities, like mining activities. Well-known large Multinational banks are more confronted with human rights issues than smaller banks.

Labour General All banks pay attention to CSR aspects related to labor, but often selectively. Large Multinational banks have incorporated specific aspects into their code of conduct. The Indian banks follow to a large extent the policy of the mother company, with the exception that local standards are used.

Right to organize Although all banks acknowledge the right of their employees to organize, they seem less eager in the Indian context. Several Indian stakeholders mentioned that trade unions in India are not fully independent and are closely affiliated to political parties.

Consumer protection Safety In general, banks pay a lot of attention to product safety and quality in order to fulfil requirements of their buyers. Product safety is ensured through the supply chain, by means of audits and training. Right to information Information towards consumers seems to be mainly focused on product information and to a much lesser extent on processes. Only one code of conduct explicitly mentioned transparency to customers and society on products and processes. The impact of corporate Social Responsibility o the cost of Bank Loans How do financial markets view socially responsible companies? Among financial economists, the accepted view of the firm has managers working to maximize the utility of the shareholders. To the extent that the interests of other stakeholders are considered, the goal must be shareholder wealth maximization. Classical finance theorists remain steadfast in their

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belief that if corporate social responsibility (hereafter CSR) initiatives do not maximize firm value, they represent a costly diversion of scarce firm resources. The traditional shareholder view recognizes that the unfettered pursuit of profit may result in negative externalities for other constituents, but holds that the burden of dealing with these social issues is best left to governments, who have both the means and the jurisdiction to deal with them. However, the sovereignty of the shareholder view has come under attack from management and strategy researchers who argue that the firm has multiple stakeholders, including employees, suppliers, and the larger community in which it operates and that the proper goal of management must be to meet the objectives of all stakeholder groups simultaneously. According to advocates of the stakeholder view, corporate social responsibility goes beyond simply staying within the rules of the game, and has been defined as actions that appear to further some social good, beyond the interest of the firm and that which is required by law (McWilliams and Segal (2001)). A recent survey by the Center for Corporate Citizenship at Boston College finds the majority of U.S. business executives sharing this view. They describe the role of management as balancing the goals of investors, employees, consumers, communities and the environment. Recent work by Faleye et. al. (2006) documents the impact of an additional stakeholder on corporate behaviour in the United States. They find labor controlled firms deviate from strict shareholder wealth maximization, investing less in long term assets and taking less risk. Support for the stakeholder view is even stronger outside of the United States, with employees being the stakeholder group most often given explicit consideration. In an attempt to reconcile CSR with the shareholder view of the firm, stakeholder theorists suggest that pursuing multiple objectives need not be detrimental to shareholder interests. In fact, they argue that satisfying multiple constituencies may actually increase financial performance (e.g., Clarkson (1995); Waddock and Graves (1997)). This argument posits that companies paying attention to issues of sustainability and social responsibility are more likely to perform well in all dimensions, including financial performance. If the company strives to satisfy all stakeholders, the stakeholders will reciprocate by supporting the firm. Employees will be more loyal. Outside stakeholders will be more supportive. Ultimately (although perhaps not immediately) this is manifest in superior performance (Bansal (2005)). A related argument is that socially responsible companies will be less prone to extreme negative events. By including environmental, social and governance considerations into business plans, firms reduce the risk of financial fallout that may accompany lapses (Buysse and Verbeke (2003)).The debate between the shareholder

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and stakeholder views revolves around whether investments in CSR are value enhancing, or whether they are examples of agency conflicts between managers and shareholders (Jensen and Meckling (1976)). Barnea and Rubin (2005) suggest that CSR investments are motivated by the desire of managers to burnish their reputations as responsible stewards of industry at the expense of shareholders. This represents an agency cost of equity similar to the purchase of unnecessary corporate jets (Yermack (2006)) or other excessive perquisite consumption. First, we examine the role of CSR in a channel of the debt market. Second, our focus exploits the unique role of banks as quasi-insiders of the firm, to explore whether banks discriminate between firms with low levels of CSR and those with higher levels. The banking literature has long established that banks are fundamentally different from other stakeholders. In their roles as delegated monitors (Diamond (1984); Fama (1985)), banks are given access to information about the firm that may not be available to outsiders. They use this information to make initial decisions about the ability of the firm to honor its loan obligations and, after
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the loan agreement is struck, to monitor the firm to ensure repayment . Among the options available to banks to mitigate risk are demands for security, shortened maturity, adding
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covenants or increasing the spread charged on the loan to reflect the risk . Because bank lenders are able to engage in more detailed monitoring as well as to tailor loan terms, they may be more finely tuned to any impact of CSR than are public lenders. Of interest here is whether loan contract terms, and in particular, loan spreads are influenced by the social performance of the firm. Consistent with the loan pricing literature, our dependent variable is the loan spread over LIBOR on private bank debt. There is some support for the monitoring role of banks in the context of environmental issues. Aintablian et. al. (2004) find higher positive abnormal returns when new bank loans are announced for firms with higher potential for spills compared to those with more benign environmental profiles. While results are not presented in that paper, one suspects that banks compensated for the risk inherent in lending to companies with questionable environmental practices by charging higher yields. The link between financial performance and social performance has been examined in both the management and the finance literatures. The bulk of the finance literature views the question through the lens of socially responsible investing (SRI). Often used interchangeably, SRI and CSR are related but subtly different concepts. CSR researchers look for links between social performance and financial performance at the firm level. SRI research focuses on the returns to investing in portfolios of companies that are identified as socially responsible. 36

Following these international principles involves assessing the social and environmental impact of large-scale project finance before granting the financing BBVA announced that it was signing up to the Equator Principles, a set of social and environmental guidelines promoted by the International Finance Corporation, a World Bank organization, which governs how adopting banks must act in granting large-scale project finance, with particular attention to emerging countries. BBVA is thus moving forward with its comprehensive Corporate Social Responsibility strategy and the progressive expansion of its business, with an innovative, global vision. Adoption of the Equator Principles is a very important step in BBVA's commitment to harmoniously reconciling the economic, social and environmental aspects of its business, thus advancing towards a sustainable model of development, according to Francisco Gonzlez, chairman of BBVA. The Equator Principles, which are adopted voluntarily, have so far been accepted by 22 major international financial institutions, which BBVA has now joined. These institutions are as follows: ABN AMRO, Bank of America, Barclays, CIBC, Citigroup, Credit Lyonnais, Credit Suisse, Dexia, Dresdner, EKF, HSBC, HVB, ING, KBC, MCC, Mizuho, Rabbobank, Royal Bank of Canada, Standard Charter, Royal Bank of Scotland, West LB and Westpac. By adopting these principles, BBVA undertakes not to directly finance projects worth more than $50 million that do not fulfill the social and environmental standards established by the International Finance Corporation. In order to do this, it must put all these kinds of projects through an environmental and social assessment process before granting any financing. Once financing has been granted, BBVA undertakes to monitor compliance with those standards. BBVA is one of the most important international players in financing these kinds of projects. In 2003, it came third worldwide in Dealogic's classification of leading project finance banks, with $2,124.14 million of financing and a 3.36% share of the world market. BBVA: commitment to sustainable development

The social and environmental standards that must be taken into account are: Categorizing the risk of a project in accordance with social and environmental impact criteria in three categories: A High Risk, B Medium Risk and C Low Risk.

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Social and environmental assessment of projects classified as A or B. The study must deal with the social and environmental aspects of the project to the bank's satisfaction. Drawing up an Environmental Management Plan for all Class A projects and those Class B projects for which the bank deems it advisable. The Plan must take into account the conclusions of the socio-environmental assessment and propose migration plans, monitoring and management of social and environmental risks.

A plan to monitor social and environmental aspects. Financing contracts must include clauses regarding compliance with social and environmental standards and the Environmental Management Plan.

The socio-environmental assessment necessary in each project includes questions such as the following: Sustainable development and use of renewable natural resources. Protection of health, cultural diversity and biodiversity, including endangered species and sensitive ecosystems. Particularly important risks. Health and safety systems. Systems to prevent fires and safety risks. Socioeconomic impacts. Land acquisition and usage systems. Involuntary population resettlement. Impact on indigenous communities and people. Cumulative impact on previous and future projects. Participation of affected sectors in designing and implementing the project. Weighing up alternatives that are preferable in social and environmental terms. Efficiency in production, transport and consumption of energy. Prevention and control of pollution and optimizing waste management.

By adopting the Equator Principles, BBVA is reaffirming its commitment to being at the forefront internationally in the financial sector concerning Corporate Social Responsibility, in line with its firm desire to align itself with the needs of all of its targets customers, shareholders, employees and suppliers - and the societies in which it carries out its business.

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The role that banks could and should play in addressing financial exclusion on the basis of their corporate social responsibilities:

While some banks are undertaking voluntary initiatives in this regard, those initiatives are unlikely to be enough to have any real impact on the problem, and some regulatory intervention will be required to achieve both longevity and scale with respect to such initiatives.

Financial exclusion The term financial exclusion has been in use in the United Kingdom since at least the mid1990s, defined broadly as: Those processes that prevent poor and disadvantaged social groups from gaining access to the financial system. (Leyshon & Thrift 1995, p.312) Financial exclusion subsequently came to be viewed in the U.K. as a lack of access to the mainstream financial system, which includes banks, building societies and credit unions.

According to research undertaken in the U.K. in 1999, 7% of British households had no access to mainstream financial products at all, and 29% of British households were found to have lacked access to mainstream credit, although it was unclear how many of those

households sought or desired access to credit. Those who lacked access to credit fell into two main groups: those with poor credit histories and those living on low incomes. It was found that those living on low incomes were likely to turn to alternative or fringe credit providers to meet their credit needs. (Kempson et al. 2000)

The lack of access by certain consumers to appropriate low cost, fair and safe financial products and services from mainstream providers. (2004, p.58) This definition is interesting for its emphasis on the cost and safety of available products, which largely distinguishes between mainstream credit products and some alternative credit products such as payday loans. Chant Link & Associates confirm the implications of financial exclusion in relation to low-income people. Financial exclusion becomes of more concern in the community when it applies to lower income consumers and/or those in financial hardship. Why should banks have a role in addressing financial exclusion? It is argued that banks, together with government and the community sector, have a key role to play in addressing the lack of access to small amount, short-term credit for low income 39

people. Imposing such a role on banking corporations can be justified on the basis that banks, as well as other corporations, have a responsibility beyond that owed to shareholders, extending to a broader stakeholder group including members of the communities in which they operate. This broader responsibility has been recognized by banks themselves, many of whom publish annual corporate social responsibility reports, noting the importance of corporate social responsibility (CSR) to their businesses.

Corporate Social Responsibility (CSR) includes the way we make business decisions, the products and services we offer, our efforts to achieve an open and honest culture, the way we manage the social, environmental and economic impacts of our business and our relationships with our employees, customers and other key stakeholders.

CSR means conducting its business so that it meets its financial, social and environmental responsibilities in an aligned way. At its core, it is simply about having a set of values and behaviors that underpin its everyday activities, its transparency, its desire for fair dealings, its treatment of people, behavior that involves voluntarily sacrificing profits, either by incurring additional costs in the course of the companys production processes, or by making transfers to non-shareholder groups out of the surplus thereby generated, in the belief that such behavior will have consequences superior to those flowing from a policy of pure profit maximization. (1993, p.261) This goes beyond a concept of profit-maximization constrained only by law and regulatory compliance, which was very much the limited approach to CSR taken by the Corporations and Markets Advisory Committee which defined CSR in the following terms:

A company will be seen to be socially responsible if it operates in an open and accountable manner, uses its resources for productive ends, complies with relevant regulatory requirements and acknowledges and takes responsibility for the consequences of its actions. (2006, p.iv)

This view of CSR contemplates companies giving consideration to social and public welfare questions in making decisions, even where some profit-sacrifice is involved. The superior consequences referred to may include strategic benefits to a corporation, for example in terms of its public image and reputation, and in that sense may result in profit 40

return in the long-term, notwithstanding short-term profit sacrifice. Alternatively, those superior outcomes may be more philanthropic, being socially beneficial but not necessarily of strategic benefit to the corporation- although even then, reputational benefits to the corporation might be shown.

On the face of it, banks seem to be the perfect vehicle for addressing this aspect of financial exclusion given their clear financial intermediary role in society. This will often amount to a strategic exercise of CSR, given the possible reputational benefitsof such activities. It may therefore be profit- sacrificing in the short-term, but with long-term profit-making possibilities. Parkinson refers to the concept of relational responsibility, whereby: companies should sometimes forgo profits in order to reduce the harmful impact of their activities, to treat beneficently groups with whom they deal, or to bring their resources to bear in helping solve problems, [as having a certain] intuitive appeal. (1993, p.304)

Beyond intuitive appeal, however, this view of CSR can be justified under the banner of stakeholder theory, as well as under a general argument that power and resources should bring with them a corresponding social responsibility.

Whereas the shareholder theory of the corporation encourages a focus on profit making to benefit corporate owners, stakeholder theory requires companies to make decisions having regard to the effects of those decisions on those with a stake in the company, such as suppliers, customers, employees, management and the local community (Post 2003). A key justification given for shareholder theory is that of economic efficiency, that is, that the pursuit of profits for the benefit of shareholders is efficient in the sense of being financially beneficial to society . This argument cannot always be maintained, given that the pursuit of profit by one corporate entity may in some circumstances be of little or no benefit to society at large, due to factors such as externalities where the costs of a companys activities are borne by society and not the company. Conversely, where a corporate entity acts specifically to benefit social welfare, for example by providing just and adequate services to low income consumers, then financial benefits such as a decreased reliance on social welfare, fewer bankruptcies and so forth, may well follow. Another argument in favor of the shareholder theory of the corporation is that shareholders are in a unique position requiring special protections, given that they are 41

property owners without management control over their property. It should be noted, however, that the law often constrains the exercise of property rights and the uses to which property can be put where that exercise of rights adversely affects others. There seems no justification for shareholders to enjoy an unbridled right to have profits pursued for them at cost to others in society. As Parkinson notes: There is little to commend the view that shareholders should receive rewards that do not fully reflect the social cost of the activities from which they are derived. Similarly, investors should not be regarded as entitled to the proceeds of conduct that conflicts with generally accepted non consequentiality social or moral values. (1993, pp.334-335) This is not to say that the pursuit of profits and return to shareholders must be abandoned, but rather that there needs to be a greater balance between the pursuit of profits and the use of power and resources to achieve the superior consequences referred to above, for example through contributing to a solution to a social or economic problem. This leads to argument that such a contribution to the social good should be made by banking corporations on the basis of their considerable power and resources. This argument is concerned with the legitimacy of the exercise of private as opposed to democratically elected, or at least constitutionally valid, state power. Within a free market, banks have the ability to determine who will be the beneficiaries of access to certain financial services and products. This has resulted in a lack of competition in the market for low income consumers, and consequently inadequate services for those consumers (Connolly & Hajaj 2001). To the extent that this results in those who can least afford it paying higher fees, such as bank default fees, and higher costs for credit due to lack of access to mainstream credit sources, we have private regulatory actors in the form of banks performing a redistributive role motivated by the pursuit of profit. The power and responsibility argument also relies upon an understanding that corporations are only able or allowed to exist by concession of the state, usually through legislation, and that historically the recognition of corporations depended upon a demonstrated public interest or benefit being served by the corporations existence. It is argued that banking corporations should be required to exercise relational corporate social responsibility, by providing access to safe and affordable small amount short-term credit for low income consumers (either directly or by providing assistance to other entities and organizations to undertake this work).

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WORLD BANK The World Bank is an international financial institute. With an aim of reducing poverty, World Bank provides leveraged loans to poorer countries for capital programs. The World Bank includes only two institutes and is different from the World Bank Group. The two groups of the World Bank include International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA).

Nowadays, World Bank is focusing on the achievement of the Millennium Development Goals (MDGs). It is lending at the interest rates that reveals a small mark up over its own borrowings from capital markets. MDGs aim to lend middle income countries. IDA also provides loans to low income countries with no or little access to international credit markets at low or no interest. The first group of World Bank, International Bank for Reconstruction and Development is a market based nonprofit organization. IBRD uses its high rating to lower the interest rates on loan. On the other hand, International Development Association is supported by periodic grants which are given by the member companies. The major mission of the bank is to get development and to reduce poverty by aiding development countries and their inhabitants. The bank provides them an environment for investment, sustainable growth and jobs. Thus the bank promotes economic growth through investment and also gives a chance to the poor to share the fruit of economic growth. According to the World Bank, there are five key factors that are necessary for economic growth. These factors help in the creation of business environment. The first factor is to build capacity by educating government officials and strengthening governments. The second factor is the creation of infrastructure by providing protection of individuals and property rights, the honoring of contracts and installment of legal and judicial systems for the establishment of business. Development of financial system is another important key factor of economic growth. The strong systems support endeavors to finance large corporate ventures from micro credit. Corruption is a big hurdle in economic growth so; eradication of corruption is a big factor which supports economic growth of a country. Research, training and consultancy also contribute in economic growth. The World Bank offers opportunities to conduct training programs, for research on development issues and consultancy.

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In the worlds financial markets, the funds for all the operations of bank are obtained through the IBRDs sale of AAA-rated bonds. The IDA gets its funds from forty donor countries and from loan repayments. These donor countries refill the funds of bank every three years. The two basic types of loans which are offered by the bank include development policy loans and investment loans. Social and economic developments projects are supported by the investment loans. On the other hand, development policy loans support countries policy and institutional reforms by providing quick disbursing finance. IDAs credit cards are interest free and IBRD offers loans with low interest rate. The World Bank also provides analytical and advisory services to its member states. The bank not only provides financial support but also provide such services which are required in many under-developed countries for the implementation of the lasting economic and social improvements. Moreover, the bank also provides necessary knowledge to the members to resolve their development problems. In conclusion, the World Bank is playing a very important in the world economy and it has been always appeared as a helping hand for the developing and under-developed economies.

ING BANK

ING Bank is one of the good banks of the world. In the year 2007, the name of the bank was changed from ING Bank to ING Direct. The bank has appeared as one of the best internet banks in the world in 1997. Basically with the increasing internet media, people are relying more on internet shopping and services. Therefore, the bank got the benefit and positioned itself as one of the customer caring bank. ING Direct was founded in Canada when the five major banks in the country were offering the similar services. The competition in the five giant banks was very high in the Canadian market. However, ING Direct proved itself as one of the best banks by offering low interest rates, banking fees and other service charges. ING Direct easily captured its position in the Canadian market and Canadians also gave a warm welcome to this bank. The bank was going smoothly and enjoying its serving to millions of clients in Canada. Till 1999, ING Direct operated in its national borders however, in 1999; ING Direct opened its branches in Spain and Australia. Once the bank operated across its national border, it realized that it had the potential to expand further. Soon, ING Direct started its operations in the United States and France. The further expansion of ING

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Direct took place in 2001 when it started its operations in Italy. Finally ING Direct expanded in the UK in 2003 and Austria in 2004. In Canada, ING Direct is serving more than 1.4 million customers with 850 employees. The assets of the bank are more than $22 billion. ING Direct has been providing best services to its clients. In the last ten years, the bank has provided $2 billion interest to its clients however; it has charges $0 from the customers for its charges and fees. Because of such offers, ING Direct has been able to establish its position the banking industry. ING Direct offers its clients convenience and access to its services for example, if you want to open an account in the bank, you need to sign up online and your account will be opened. There are different types of accounts offered by the bank and all kinds of accounts can be opened online from the website of the bank. Before opening any accounts such as saving, business, mortgage or mutual fund account, the rates are mentioned in front of the accounts; therefore, you should not be worried about the rates. ING Direct has shown transparency in all its products, processes and services. The bank keeps on updating its customers regarding the latest news. For getting full benefits from the services of the bank, you should check the movements of the loans and deposit interest rates. The latest promos of the bank can also provide you good information about the new offers of the bank. Most of the banks are not providing enough details to their customers about the interest rate charges. However, ING Direct tells its clients the exact figures of the interest rates. In other words, there are no hidden charges of the services of the bank. In the Accounts and Rates section of the bank on the website, all rates and charges have been mentioned. With this transparency and fairness, ING Direct is able to gain a huge profit in the bank industry. Therefore, if you want to enjoy the services offered by the bank you should opt for ING Direct. HSBC HSBC Bank is the largest international bank in the Middle East with 45 branches in the United Arab Emirates, Oman, Bahrain, Qatar, Kuwait, Jordan, Lebanon, Pakistan and the Palestinian Autonomous Area. HSBC Bank also has representative offices in Tehran, Iran and Tripoli, Libya. One of the latest endeavors of HSBC Bank is launching an international summer school in collaboration with Mosaic. Mosaic is an integrated and thriving society for supporting individuals in realizing their potential irrespective of their background. Mosaic is charitable organization which was founded by His Royal Highness the Prince of Wales within his

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charity Business in the Community for addressing the interests and issues of Muslim community. HSBC Bank Middle East Limited has partnered this Summer School for aiming to increase understanding of global social and environmental issues and for creating positive relations between individuals from both the Muslim and non Muslim world. The International Summer School has been founded in association with the United Kingdom Foreign and Commonwealth Office. The summer school is a two week program which will include debate and discussion around key issues that are faced by the communities worldwide. These debates and discussion will be carried out by the visiting projects across the UK to bring the discussions to life. There would be delegates from different regions consisting of wide range of individuals from very diverse professional and educational backgrounds such as teachers, HR professionals, students, engineers and business leaders, from an age group between 20-40 years. These individuals would be coming from countries like Bahrain, Oman, UAE, Qatar, Egypt, Jordan, Saudi Arabia, Iraq and Pakistan. The Regional Head of Corporate Sustainability, HSBC Bank Middle East Limited, Kaltham Al Koheji says about the International Summer School that This program presents a unique opportunity for HSBC Bank to nurture and support the young people of our region. We hope it will go some way in making an impact on the education of our talented participants. If today's students are taught the importance of good leadership qualities, we believe they will go on to be better leaders as they move ahead with their careers. The core of HSBC Banks community investment is to encourage education as well as promote diversity and this program delivers on these objectives.' The first week of the program would be spent Cambridge and would be consisting of seminars and discussion groups that would contribute to the theme of inspiring leadership in the 21st century. During the second week of the program, the delegation will be divided into groups who will be visiting projects around the United Kingdom. After the visit they would come back to London and share their learning as a group. These delegates would become the alumni of this international summer school. This would show their commitment to harbor positive relations and collaborative action between the Muslim and non Muslim world. When they would return home, they would use their learning to help bring a change in their local communities. They would help change and develop positively various parts of the community such as education and business.

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Such programs should be organized often. In the times when there anti Muslim sentiments are increasing ay by day and the Muslims and non Muslims are moving far apart, such platforms are badly needed. As for the nature of the program, it is a great opportunity for all the participants to share there experiences. Everything is practices in a different manner in different countries and cultures, be it business, education etc. It is good to the practices from each other so the best ones can be adopted by the most. GE MONEY BANK GE Money Bank is a unit of General Electric Company aimed at meeting financial needs of the population and small enterprises through the provision of services. It is a leading provider of retail banking and credit services. GE Money Bank has its headquarters in London, UK. The total assets of GE Money Bank are more than $200 billion. In the year 2008 made a three year commitment with FINCAs Village Banking Campaign, worth $1.5 million. FINCA is one of the leading organizations internationally when it comes to micro finance organizations that are providing services to the entrepreneurs in low income group all over the world. For more than 20 years FINCA has been giving community based credit and savings opportunity to break the vicious circle of poverty. FINCA is operating in 21 countries to provide socio economic development to the disadvantaged low income group. Through Village Banking Campaign, GE Money Bank and FINCa, is committed to provide small loans, savings products and insurance to about one million low income entrepreneurs of the world by the year 2010. As GE Money Banks corporate social responsibility it is committed to support and promote financial literacy, economic empowerment and development. Therefore it has partnered with FINCA to provide value added services to the impoverished and disadvantaged group of people. This monetary donation to FINCA is part of the GE Money Banks global philanthropic program, Banking on Women. GE Money Banks President and CEO Bill Cary states that Banking on Women is about investing in the worlds women because sharing knowledge, time and experience can help transform lives, At GE Money, were committed to improving lives by promoting sound financial education, successful entrepreneurship and an investment in the human spirit. During the year 2008, FINCA used the first installment of $500,000 for providing additional start-up capital for FINCA Jordan which was FINCA Internationals latest program in the Greater Middle East. It also expanded FINCAs outreach in Malawi which is one of the poorest countries in Africa.

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For entering into India, FINCA developed a business plan and feasibility study, one of its priority countries. Operations in Ukraine were also started as part of the plan to expand to the Eurasia region. Another most important project that was started was the initiation of health education project in Mexico. In the local market GE Money Bank organized financial education and entrepreneurial training with the view to target the program to the specific needs of each community. GE Money Banks own employees volunteered to help people living in their surrounding to help them have a better life. FINCAs International Executive Director Rupert Scofield appreciated the commitment and efforts of GE Money Bank and said that GE Moneys commitment will allow us to more rapidly advance our strategy of broadening and deepening our outreach in current programs, as well as expanding into high-density populations where the need is tremendous, and the supply is always lacking. In addition, GE Moneys CSR commitment matches perfectly with our goals of helping the industrious poor better manage their resources in order to achieve self sufficiency over the long term. The GE Money Bank has been quite generous in doing charitable activities. As in the year 2007 the GE Money Bank in Hungary, Budapest organized Day of Care. In this charity program not only the bank employees volunteered but their families also took part in it. The Day of Care was aimed at improving the overall environment of the Special Training and Development Institute. The volunteers tried to make a difference to the lives of the disadvantaged children. The bank also donated HUF 1,200,000 in cash for the betterment of the school. DEUTSCHE BANK Deutsche Bank is an international universal bank. The headquarters of the bank are present in Frankfurt, Germany. More than 81 thousand employs of Deutsche bank work in 76 countries. A large percentage of employs belong to Europe, America, Asia Pacific and the emerging markets. The major financial centers including Sao Paulo, New York, London, Toronto, Tokyo, Moscow, Hong Kong, Sydney and Singapore have offices of Deutsche Bank. Deutsche Bank is also investing in expanding markets including Middle East, Asia Pacific, Latin America and Central and Eastern Europe. The bank offers many services to its clients including sales, trading, origination of debt and equity and M&A (mergers and acquisitions). Risk management products include wealth management, derivatives, fund management, transaction banking, retail banking and wealth

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management are provided for corporate and institutional clients along with private and business clients. The business structure of the bank is very huge because of the various operations and divisions controlled by the bank. It has been observed that through the management of the proper business structure and model, the bank has been able to show good performance in its industry. In fact the previous years income of the Deutsche Bank shows that it has been earning huge profitability in the previous years. To understand the performance and popularity of Deutsche Bank, understanding the business structure of the bank is very important. Basically there are different divisions of the bank such as Abbey life; Assurance Company and Abbey life are owned by Deutsche Bank. The pension polices of Abbey are closed now but sold many polices in 1980s. Exit penalties, for all new and old polices, was scrapped by standard Life and Norwich Union. Basically Deutsche Banks CIB is considered as one of the worlds leading investment banking houses. Market-leading markets and Global Banking Divisions of the bank come under CIB. Global Markets add a great contribution in Deutsche Banks profitability and revenues. Moreover, a major Merger & Acquisitions (M&A) is controlled by Global Banking. The business model of the bank consists of two pillars including the Corporate & Investment Bank (CIB) and Private Clients & Asset Management. The private wealth management, private & business clients and asset management have been controlled by divisions of Private Clients & Asset Management (PCAM). This business division of the bank deals with the investment management for private and institutional clients. Moreover, retail banking services are also conducted by this division. The private banking arm of Deutsche Bank is Private wealth Management which is serving the individuals of high net worth. This division of Deutsche Bank has global presence. Another major division of Deutsche Bank is Private and Business Clients which is the retail network of the bank. This division of the bank has actually grown over the years. Deutsche Bank has also conducted global expansion in the past two years by expanding its operations in the emerging markets such as India and China. Deutsche Bank has global presence because over the years, the bank has expanded its operation to various markets. In the history of Deutsche Bank various acquisitions and mergers have taken place. These acquisitions have played a very vital role in changing the business structure of the bank. Therefore, it can be said that the business structure of Deutsche Bank is very dynamic. The business structure of Deutsche Bank matches with its mission statement. The mission statement of Deutsche Bank advocates that the bank aims to become the leading global provider of financial solutions. 49

BARCLAYS BANK Barclays bank was founded n the year 1960 and is a major bank operating globally with 1800 branches in UK alone. It is providing commercial banking, investment banking and investment management to millions of its customers. The headquarters of the Barclays Bank is in London, England. It has its operations in many countries around the world. Barclays Bank has passed through many phases and undergone many mergers and acquisitions since its inception. The recent being that of Lehman Brothers. Barclays Bank purchased investment banking and trading divisions of Lehman Brothers, including the New York headquarters building. Lehman Brothers was an exemplary financial institution that got hit by the economic crisis and finally had to be acquired by the Barclays Bank. Over the years Barclays Bank has remained involved in many controversies. Many controversies surrounded it for years. Barclays Bank was accused of supporting the apartheid government in South Africa. It was known as Boerclaysbank during the apartheid regime due to its alleged involvement in supporting the government. Because of the apartheid government, people of South Africa have suffered greatly so it was a great blow to their reputation to be associated with them. In 2006, The Jubilee South Africa backed Khulumani Support Group; an activist group in South Africa lodged a case against Barclays Bank for supporting the apartheid government during the 1970s and 1980s. The South African Ministry of Justice is seeking dismissal of the case on the grounds that it deteriorates its national sovereignty. This is not the only case of Barclays Bank involvement in supporting a controversial government and assisting monetarily in violating human rights. There is another such case and of the same region where people are suffering a great deal at the hands of their government. The people of these regions have been dealing with civil war and instability. So anyone who aids them in any manner would be accused in equal in the atrocities that they have afflicted. One such example is Barclays Bank support of the Mugabe government in Zimbabwe. Barclays Bank provided 30m loans to help sustain Mugabes land reforms that captured white-owned farmland and drive more than 100,000 black workers from their homes. Many protested that the Barclays Bank involvement a 'disgrace' and an 'insult' to the millions who have suffered human rights abuses. Not only this, Barclays Bank provided bank accounts to two of Mugabes associates, ignoring European Union sanctions on Zimbabwe.

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Barclays Bank was accused of violating international anti-money laundering laws in 2009. One of the branches of Barclays Bank had the account of Equatorial Guinean Presidents son who was accused of siphoning oil revenues from the government funds. Another controversy surrounding Barclays Bank is that even though the subprime mortgage crisis in the US forced the bank to take a 1.6bn hit in 2007, Robert Diamond, a US-born banker on the board of Barclays, received a 14.8m bonus in 2008. Barclays Bank has also been involved in tax avoidance. One such report was published by The Guardian. This report was removed form the website of The Guardian after Barclays Bank obtained injunction for that. This created a great hue and cry that they are trying to hide their tax details. Barclays Bank is known to be involved in the arms trade as well. In fact it is known to be the biggest arms dealer having a great share in the arms manufacturing company. Controversies keep evolving and revolving. Sometimes these are started by the opponents to mar the reputation of an entity. Sometimes they are realities. But there needs to be proof to support them. In this world of turf war among corporate giants it is very difficult to believe what the truth is. BANK OF AMERICA The year 2007 has brought with it the worst credit crisis. Bank of America is one institution that has successfully survived this credit crisis. It would not have a slightest impact of the credit crisis if bank of america has not purchased Merrill Lynch. Bank of America is one of the largest financial services corporations which is the largest bank by assets and the largest commercial bank by deposits. The number one underwriter of global high yield debt is bank America. The bank of America has passed through various phases over the decades. It has a very diverse and rich history. Initially it was Bank of Italy founded in San Francisco in the year 1904. Over the years this bank underwent various mergers and acquisitions and finally became Bank of America in 1929. The founder of the Bank of America was Amadeo Giannini. Giannini set out to build a national bank by expanding into most of the western states as well as into the insurance industry, under the aegis of his holding company, Transamerica Corporation. Regulators succeeded in forcing the separation of Transamerica Corporation and Bank of America under the Clayton Antitrust Act in 1953. Bank of America and Transamerica were separated

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because a passage of the Bank Holding Company Act of 1956 prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America was again started expanding its domestic consumer banking activity outside California after a change in federal banking legislation and regulation in 1980s. The Bank of America introduced the BankAmericard in 1958, which was later called VISA after the change of name in 1975. Bank America Corporation was established for the purpose of owning Bank of America and its subsidiaries. Bank America expanded outside California in the year 1983 by acquiring Seafirst Corporation of Seattle, Washington. BankAmerica was dealt huge losses in 1986 and 1987 by the placement of a series of bad loans in the Third World, particularly in Latin America. Bank America suffered great losses in 1986 and 1987 due to series of bad placement of loans in the Third World, especially in Latin America. In 1992 Bank America acquired its California rival, Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon, and Washington. Bank America also acquired Valley Bank of Nevada fro expansion in Nevada. In 1997 NationsBank acquired Bank America for US$64.8 billion which resulted in the combined assets of US$570 billion and 4,800 branches in 22 states. In 2004, Bank of America purchased FleetBoston Financial for $47 billion in cash and stock. All of the banks and branches of FleetBoston Financial were given the Bank of America logo. FleetBoston was the seventh largest bank in United States at the time of merger, with $197 billion in assets, over 20 million customers and revenue of $12 billion. 1 January 2006 Bank of America purchased MBNA, a credit card giant, for $35 billion in cash and stock. In the year 2996, Bank of America expanded its business in Brazil, Chile and Uruguay. Bank of America purchased The United States Trust Company from the Charles Schwab Corporation for $3.3 billion in 2007. Bank of Americas acquisition of ABN AMRO North America and LaSalle Bank in 2007 lead to an increase in its presence in Illinois, Michigan, and Indiana by 411 branches, 1.4 million retail customers, 17,000 commercial bank clients, and 1,500 ATMs. In the year 2008, Bank of America bought Countrywide Financial for $4.1 billion. The latest acquisition of Bank of America is of Merrill Lynch. The deal closed in 2009. With all these acquisitions and mergers Bank of America expanded greatly. But it sustained due to its commitment and honesty to its customers. 52

ANZ ANZ is a very popular financial institution which is offering full range of banking products and services. The company is known for its expertise and reliability therefore, it has been able to maintain its position in its industry. ANZ deals with managing cash flow to financing complex deals. ANZ gives a great focus on customer relationship and your relationship manager will connect you with the whole bank. The bank offers various kinds of products and services. The financial services offered by ANZ include cash flow, loans, trade, and complex finance. The transaction services of ANZ include account structuring, credit cards, electronic solutions and merchant services. The investment and international services of ANZ include investment accounts, managed funds, foreign exchange, risk management, trade finance, and hedging products. One of the major products offered by ANZ is its ANZ first card. The statement, `The ANZ First Card is the first choice for low balance transfer` is very true. Let us justify this statement. Basically the interest rates are very high nowadays and it will be very tougher for a person who owes a significant amount of money on a card. Therefore, turning to ANZ first card to reduce the stress is the best option. The balance transfer rate of ANZ first card is very low therefore; you can save a lot of money. The free interest period of ANZ first card is also long which is currently 44 days. There are many other features of ANZ first card that makes it beneficial for the card holder. The ANZ first card offers online fraud protection through which you can make safe online purchase each time when you will go online. The best thing about ANZ card is that the company informs you about all kinds of charges so that you may get all financial information. ANZ first card is the perfect option for you because it offers free additional cardholders on your account. The benefit of this option is that if you want your spouse of your kid on your account, then you would not be charged extra dollar. It is ANZ first card which allows you to enjoy the additional cards without any hidden cost or charges. Another benefit of ANZ first card is that you can enjoy online banking. It provides great convenience and comfort to the customers. You can pay all of your bills online. You can go anywhere in the world with this card. You can check your balance online. ANZ bank considers the convenience of its clients very keenly and it is evident from the features offered by the bank through its cards. Moreover, the card offers very low cost for the balance transfers. The competition among the banks and financial institutions is very high which makes it overwhelming for the people to select a particular company. However, through proper 53

evaluation of the features of the products you can easily find the best option for you. ANZ first card is the perfect choice for those who are looking for convenience, low balance transfers and protection from the online frauds. You may get such features from other cards as well, however, the cost of ANZ first card is really low and it will help you to manage your finances more efficiently. In conclusion, ANZ bank offers high quality products and services to its customers at very affordable rates.

ROYAL BANK OF SCOTLAND In the history of banking all over the world The Bank of Scotland holds an iconic place because it is the second oldest bank that has survived till date. It was established in the year 1695. It is based in Edinburgh, Scotland. Two of the most mentionable features of The Bank of Scotland is the it is the only commercial institution created by the Parliament of Scotland and also it is the first bank to start printing its own banknotes. The Bank of Scotland is a subsidiary of Lloyds Banking Group. Initially the Bank of Scotland was established to aid the Scottish business community. It was not allowed to lend to government without the approval of the parliament. The Bank of Scotland was the first bank in Europe to issue bank notes. Other banks were allowed to issues notes after 1716 when the Bank of Scotland monopoly was lapsing. In the second half of the 20th century The Bank of Scotland underwent many acquisitions and mergers. The Bank of Scotland diversified its services by entering into consumer credit with the purchase of North West Securities. It also merged with the Union Bank of Scotland. It also established a merchant banking division. Pioneer in many things already, it was the first bank in United Kingdom to install computer for processing accounts centrally. The Bank of Scotland started expanded its business internationally after moving into financing the energy sector after the arrival of the North Sea Oil to Scotland. The first international office of the Bank of Scotland was in Houston, Texas. It then moved onto United States, Moscow, Singapore, Australia and New Zealand. It acquired Countrywide Bank and Bank of Western Australia in New Zealand and Australia Respectively. The Bank of Scotland met real competition when The Royal Bank of Scotland came into the market. The real competition was on the issuance of banknotes. The Royal Bank of Scotland devised a policy to either drive the Bank of Scotland out of business or to acquire. Since it

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could not succeed in acquiring it, it tried to outrun it by over issuing its own bank notes. The Bank of Scotland suffered a great deal because of this and it had to ask for loans to pay for these notes. The reputation of the Bank of Scotland suffered a lot. But fortunately it recovered without giving in to the royal Bank of Scotland in the year 1729 and started lending again. It was in the year 1751 that both banks started accepting each others notes. The Bank of Scotland was the only bank operating in English. But in the year 1972 it issued its first Gaelic cheque book. Since that day the Bank of Scotland is operating in both English and Gaelic. The Bank of Scotland issued its one series of bank notes in 1995. They were known as Tercentenary Series because they were issued in the year of the three hundredth anniversary of the foundation of the bank. On the front of each denomination features Sir Walter Scott o, and on the back are representations of industries that Scotland excels in as follows:

5 note has a vignette of oil and energy 10 note has a vignette of distilling and brewing 20 note has a vignette of education and research 50 note has a vignette of arts and culture 100 note has a vignette of leisure and tourism

These notes have been replaced gradually with the 2007 series. The major difference of the new notes from the old ones is that it has larger text than before. The Bank of Scotland has survived and flourished a great deal over the centuries. 2.13 CRITICISM Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's principal purpose is to maximize returns to its shareholders, while obeying the laws of the countries within which it works. Others argue that the only reason corporations put in place social projects is utilitarian; that they see a commercial benefit in raising their reputation with the public or with government. Proponents of CSR, however, would suggest a number of reasons why self-interested corporations, solely seeking to maximize profits are unable to advance the interests of society as a whole. Key challenges to the idea of CSR include:

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The rule of corporate law that a corporation's directors are prohibited from any activity that would reduce profits

Other mechanisms established to manage the principal-agent problem, such as accounting oversight, stock options, performance evaluations, deferred compensation and other mechanisms to increase accountability to shareholders.

Because of this, it has been suggested that CSR activity is most effective in achieving social or environmental outcomes when there is a direct link to profits: hence the CSR slogan "Doing Well by Doing Good". Note that this requires that the resources applied to CSR activities must have at least as good a return as that that these resources could generate if applied anywhere else, e.g. capital or productivity investment, lobbying for tax relief, outsourcing, off shoring, fighting against unionization, taking regulatory risks, or taking market risksall of which are frequently-pursued strategies. This means that the possible scope of CSR activities is drastically narrowed. And corporations, with their constant incentive to maximize profits, often have identified all areas where profits could be increased, including those that have positive external social and environmental outcomes.

2.14 SCOPE OF CSR The scope for CSR is thus narrowed to situations in which:

Resources are available for investment The CSR activity will yield higher profits than any other potential investment or activity

The corporation has been remiss in identifying this profit opportunity

A conflict can arise when a corporation espouses CSR and its commitment to Sustainable Development on the one hand, whilst damaging revelations about its business practices emerge on the other. For example the McDonald's Corporation has been criticized by CSR campaigners for unethical business practices, and was the subject of a decision by Justice Roger Bell in the McLibel case (which upheld some of these claims, regarding mistreatment of workers, misleading advertising, and unnecessary cruelty to animals). Similarly Shell has a much publicized CSR policy and was a pioneer in triple bottom line reporting, but was

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involved in 2004 in a scandal over the misreporting of its oil reserves which seriously damaged its reputation and led to charges of hypocrisy. 2.10 HE 'HOW' OF CSR IN INDIAN BANKING INDUSTRY

Most Indian banks undertake initiatives, which in the strictest definition of the term qualify as Corporate Social Responsibility. In the absence of A structured approach to defining Corporate Social Responsibility and A system for its deployment, banks are often unaware of the nature of CSR related initiatives undertaken, the magnitude of their investments in CSR related initiatives and since the investments (often substantial amounts) are not systematically deployed, these at times prove to be ineffective. KOTAK MAHINDRA BANK: Their CSR actions focus on: As they grow and expand as a bank they have to constantly endeavor to utilize themselves in a more productive and consistent manner so that they achieve their business goals and become great managers in the process. In this journey, their role is critical in creating success stories exhibiting overall right behavior and delivering their responsibilities aligned to their organizations values and philosophy. Appended are some of the behavioral DOs and Donts which need to be followed for proper CSR management. People: DOs

Respect individuals and practice the Kotak Values. - Believe in CAN DO Endeavour to bring out the best in people - Treat people not as they are, but what they are capable of being.

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Tolerance - Give your team permission and the space to grow through honest mistakes. Encourage participation In team meetings encourage questions and clarify doubts. Build perception of integrity around yourself as it as important as practicing integrity. Be as much a friend to your subordinate as much as a superior. Respect an individuals work life balance needs. Stick to issues at hand , do not personalize discussions Command respect, do not demand it. Build a transparent and approachable culture so that the employees feel free to share their concerns with you first, rather than your supervisors.

Know your people as Individuals and not just as a resource. Treat them as adults with whom you can have an intelligent dialogue.

Donts Do not use foul language or abuse colleagues at work. No usage of profanity It is an integrity and values violation. Under no circumstances will abusive language be tolerated.

Counsel only on performance. Dont threaten any employee with termination. Do not refer to the race of the only minority in a group. Do not single out one individual's disabilities simply for the sake of identification. Do not use words that imply victimization or create negative stereotypes. Dont reprimand in public. Dont add acrimony in your description of members of a group. Dont indulge in loose talk. It is strictly prohibited to discriminate on Gender. As a committed equal opportunity employer it is expected of you to treat women employees with dignity and respect.

Do not criticize other departments or a person who is not present publicly. Dont indulge in political talk , be transparent Dont create an anxious atmosphere and undul y pressurize people , under pressure people behave in undesirable ways

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Process: DOs Concentrate on output while keeping high focus on input too Quality of input will augment output.

Strictly adhere to the KYC guidelines. Tampering of documents, misrepresenting facts, use of fraudulent documents are grave offences and will call for severe punitive measures.

Managers need to make sure all documents are signed and verified and in any case of fraudulent documentation the manager will be penalized along with his/her team. Make it a habit to check reports such as DSRs etc. on a daily basis.

Do start and finish all the meetings with positive or upbeat topics. Consistently time your meetings. Start and end meetings on time. Meet requisite customers with your team members in a month. Ensure that all your team members are mapped correctly in HRMS and all transfers are done online.

Each team member should sign the muster on a daily basis. In case he/she is on a call make sure that the OD process is followed.

In case of non performance, PIP process needs to be followed. In case of any disciplinary issues please take help of your HR RM to sort out the same.

Use and encourage usage of I Applaud for appreciating colleagues Please be sensitive to the on-boarding and training needs of your team members. Ensure you release your team members for all trainings.

Donts Do not transfer newly recruited team members to a different branch for a minimum period of 6 months Any deviation should be routed and approved by the HR - RM.

Do not change the meeting day or time for ANY reason. Changing the meeting sends a signal that meetings are not important and shows a lack of respect for the attendees time. Also never delay the meeting start time because an attendee is late.

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You are not authorized to hold back conveyance reimbursements of your team. Under no circumstances should conveyance reimbursements be used as a variable incentive.

It is strictly forbidden to use the PIP process as a threat to terminate. Use it as a development tool to make your team a success.

It is strictly forbidden to Solicit or Accept and kind of monetary/non monetary benefit from our customers/vendors.

Performance: DOs Ensure that you and your team members have thoroughly understood SOPs/KRAs.

You must strive to make sure that all your subordinates earn incentive (if applicable) or win contests, prizes. Counsel on performance on a regular basis. Dont wait for the end of the month to give feedback to an individual team member on his/her performance.

Performance will always remain a product of the knowledge an individual has. Ensure that your team is kept abreast of all the product offerings of the bank.

Monitor performance of all your team members on a regular and an ongoing basis. Please remember that the performance of your team is a direct reflection to your performance as a leader.

Act as a coach and guide to your team members. Help them understand and work towards the growth story the bank offers.

Use the PIP process not as a tool to ease out people from the system but as a tool to help them scale up the desired performance levels in the organization.

Effective retention and performance of your team reflects your performance and guidance as a manager.

Always introspect whether you have added enough value, in terms of coaching mentoring , input tracking, activity tracking etc, to the employee to earn the right to rate him harshly.

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Donts Dont distribute business sourced by an individual to other team members. Give credit only where it is due.

Your success as a leader and a manager is defined by the no of people whom you have helped to scale up rather than the no of people whom you have asked to leave the organization on performance issues.

Dont discuss your salaries or performance rating with your colleagues. Dont exhibit favoritism. Treat every one with dignity and respect as an equal contributing member of the team.

STANDARD CHARTERED BANK In view of the fact that the group has adopted a triple bottom line approach, the Business Director or the President (Business Group Head) is responsible for attainment of economic, social and environmental targets. Though there is no separate Corporate Social Responsibility policy or Social Policy, many of the group banks that are certified has environmental policies, objectives and targets. Most of the group banks are signatory to the UN Global Compact, which is construed as the CSR policy. In keeping with the triple bottom line (financial, environmental and social) approach, the group banks report on environmental and social performance in separate sections of their annual report. PUNJAB NATIONAL BANK

Sustainability Policy

Punjab National Bank is India's one of the largest nationalized bank, believe in the sustainability of growth. Our approach to sustainable development focuses on the triple bottom lines of, Economic, Environment, and People. As a business entity, we aim at improving stakeholder value through improved eco-efficiency of operations, economic enlistment of the communities we operate in, and the efficient use of capital and natural resources. The nature of our activities makes efficient utilization of resources, environmental protection, operational and transportation safety and employees health, significant components for long-

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term sustainability of our business and we stand committed to these. Being a responsible corporate citizen, we understand our role towards society. We encourage and practice open dialogue with all our stakeholders and value their considered opinion, reflecting them in our strategic plans. We also recognize that development and empowerment of our human resources are crucial to achieving our stated objectives. We shall adopt a structured approach for the implementation of the policy and regularly monitor the progress. CITIBANK Citibank has already made its mark in 2008 on the issues of climate change and sustainability. In February, Citi Bank, JP Morgan and Morgan Stanley jointly released the Carbon Principles. The Carbon Principles offer guidelines for lenders to US power companies, in light of the increase in financial risks power companies are expecting from pending carbon regulations. At the end of March 2008, Citi Bank became a Ceres network company, joining with over 70 companies that work as members of Ceres to tackle sustainability and climate change. In January, Ceres report Corporate Governance and Climate Change: the Banking Sector was released. The report scored Citi as the highest ranked US bank for their climate change governance practices. Citigroup and Bank of America jointly have pledged billions of dollars to help fight climate change while a new report questions Chinese banks' environmental policies. In June 2007, Citigroup announced an allocation of $50 billion in investments and financing to mitigate climate change over the next decade. This followed Bank of Americas announcement in March 2007 that they are pledging $20 billion to support environmentally sustainable businesses and combat climate change. With the USs two largest banks pledging to change the way they do business to support sustainability and the environment, it seems there is a new awareness of the need to do something to alleviate and adapt to global climate change. Citigroup has already invested $10 billion of the $50 billion in helping fight climate change. It plans to reduce its own greenhouse emissions 10% by 2011 across its more than 14,5000 global facilities. BoA likewise pledges to reduce greenhouse gas emissions 9% by 2009. Bank

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of America (BoA) has a program that is putting more gas efficient cars on the road for its employees with a $3,000 hybrid vehicle reimbursement program. Both BoA and Citigroup are constructing greener buildings. Citi and BoA are working for certification of their new buildings from Leadership in Energy and Environmental Design (LEED) for both their office buildings and retail branches. BoA is currently putting up offices in New York City and Charlotte, NC that are more environmentally efficient. Citis Market and Banking Group plans to put over $31 billion in clean energy and technologies, building on its current commitments of $7.5 billion. Citi recently financed the $2.15 billion ownership of a wind portfolio by Energias de Portugal (EDP) that brings new wind developments to market. Citi also offers Citi Alternative Investments and Citi Property Investors, which offer environmentally friendly investments and investment in sustainable building projects. In April, Citi created Sustainable Development Investments (SDI) and plans to commit $2 billion of private equity over the next ten years to clean technologies and renewable energy sources. BoA is committing $18 billion to help commercial clients use and produce environmentally sustainable products and technologies. Part of this initiative is a carbon-emission trading program that will allow clients to trade carbon emissions credits to achieve carbon emission neutrality. Pending regulatory approval from the Office of Currency Control (OCC), BoA plans to participate in the evolving emissions markets globally via the Chicago Climate Exchange and the European Union Greenhouse Gas Emissions Trading Scheme (EU ETS).

Individual consumers at the banks can chose climate friendly credit cards, mortgages and other banking products. Citi will plant a tree for each customer that chooses a paperless statement while BoA consumers can choose an eco-friendly credit card that for every dollar spent on the card, BOA will contribute to an environmentally organization.

While many environmental activists applaud the banks pledges, some also question how committed to clean energy the banks truly are. The Rainforest Action Network (RAN) points out that Citigroup is the largest financier of the energy industry that produces many greenhouses gases. There are four pillars that hold the Community Support Programme at Citigroup: 63

1) Funding through the organisation Critical, as without funding it is difficult for any activity to be sustainable. The philanthropic arm of the corporation, Citigroup Foundation head quartered in New York provides the initial financial support for these activities. 2) Cause related marketing This brings in a unique dimension to our programme. Cause related marketing is designed to be able to engage customers in social responsibility areas identified by us. One such example is with Citibanks cards business, the co-branded affinity cards, we have a suite of them Citibank Woman's Card, Citibank WWF card and the Citibank CRY card. Each time you use your Citibank Woman's Card, Citibank will contribute a percentage of its earnings on your behalf to 2 NGO partners of the woman's microcredit program - Society for Promotion of Area Resource Centers(SPARC) and Friends of Women World Banking (FWWB). Similarly, the WWF Citibank Card is unique, in collaboration with the Worldwide Fund for Nature. And likewise the CRY Citibank Card gives you the power to change a child's life for the better. Every time you use this Card, a percentage of what you spend is sent to CRY as contribution on your behalf. Through such initiatives, the bank endeavours to link its customers with the cause. 3) Employee volunteerism Many organizations do social responsibility but their employees may not find avenues to participate. In Citis case, the bank encourages employees to participate. Essentially each and every employee down the line is aware that the company believes in supporting the community through employee action as well, and they are mostly kept aware of the opportunities to participate. Also the information cycle is very clear and transparent for anybody wishing to participate or to know more about it. But as banking jobs are highpressure jobs, so it is entirely up to each employee on how and when they can find ways to engage themselves. 4) Advocacy Citigroup tries and optimizes their spokespersons and global speaker opportunities to advocate as far as possible their NGO partners and programs, as and when possible for the

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issues that are of concern. Citibank also provides their communication channels if required for advocacy as they believe in promoting and engaging in collaborative efforts. At Citigroup, employees & management do make time certainly on a quarterly basis. They make themselves available for meetings with NGOs, attend their presentations or give talks at the MDP programs etc. They engage in understanding of programmes, and if they find any gap areas they come in to fill these. Top management is very supportive in internal communication to encourage people to be a part of it. They are not only supportive but also vocal in promoting it within the internal senior management globally. This has definitely helped India come up on the map of social responsibility within Citigroup. They are very open and available to take any issue up the chain to our head quarters whenever required for getting any special kind of support from them. There are instances where CEO could be very happily or voluntarily be on a pay roll committee, they may visit NGOs Citigroup works with, spending an hour or two, understanding, sharing ideas and thoughts. So there's a considerable amount of involvement. Micro Credit / Micro Finance : State Bank of India

SHG Movement - A Mission SBI has taken up SHG movement as a mission .A noble mission to reach those families who were hitherto having no access to the credit by any formal financial institution and, therefore, were depending on informal sources and money lenders. Micro Finance - Deep Roots in SBI Micro finance is not new to State Bank of India. Banks association with non-government organizations (NGOs) or voluntary agencies in extending financial help can be traced as far back as 1976 well before NABARD introduced SHG-Bank Credit Linkage Programme as a pilot project in 1992.

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Steady Growth in SHG - Bank Credit Linkage Programme SBI has actively participated in SHG-Bank Credit Linkage programme since its inception in 1992 as a pilot project of NABARD. Since then the Bank has made a steady progress in financing SHGs. As on March 2006, SBI's branches spread throughout the length and breadth of the country have opened 6,30,067 Savings Bank account of SHGs out of which more than 5.41 lac SHGs have been provided with credit facilities thus benefiting more than 75 lac poor people. Majority of these SHGs are women SHGs. The year-wise cumulative position of SHGs-Bank Linkage programme for the last 4 years is as under: Year SHGs linked (financed) No. of beneficiaries Amount disbursed Amount outstanding No. of SHGs maintaining 2,79,466 Savings a/c in the Bank Amount in Savings a/c 261.36 cr. (Amt. in Rs.) SBI - Leader in SHG - Bank Credit Linkage SBI is maintaining its position as a leader among Commercial Banks in credit linking of SHGs and is a prime driver for the movement. As at the end of March 2006, SBI with a share of approximately 47% of total SHGs financed by Commercial Banks is far ahead of others. Innovations & Initiatives Bank has successfully initiated various measures toward widening its SHG network.To list a few examples: i. Sensitization of staff Bank's aim is to sensitize the entire staff from Manager to Messenger working in rural and semi-urban branches towards the programme. 348.31 cr. 411.82 cr. 434.07 cr. 3,69,568 5,08,396 6,36,067 March - 03 1,07,553 12,33,660 324.84 cr. 269.43 cr. March - 04 1,74,666 21,50,752 614.87 cr. 462.77 cr. March - 05 3,43,691 48,11,674 1311.45 cr. 872.08 cr. March - 06 5,40,481 75,68,842 2262.95 cr. 1459.89 cr.

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ii.

Special training programmes in SHGs are being conducted at 54 training centers of the Bank in the country apart from State Bank Institute of Rural Development, Hyderabad.

iii.

Close liaison with NGOs Operating functionaries at branch level and region level are in close contact with NGOs in their area to take the movement ahead. For the purpose, regular meetings are arranged with the NGOs and their support is solicited.

iv. v.

SHG cells: Special SHG cells have been opened at major branches. Lending to NGOs / Federations of SHGs: Lending to credible NGOs / Federations of SHGs on selective basis for on lending to SHGs is being encouraged. Sahayog Niwas: SBI has launched its Housing Loan product SAHAYOG NIWAS meant for SHG members. Under the scheme formulated keeping the socio economic conditions of villages insight, housing loans are given to the SHG members without any mortgage of house / land. Response to this product is very encouraging.

vi.

vii.

SBI Life - Shakti: SBI Life, our insurance subsidiary, is the first to introduce a life insurance scheme, especially designed for SHG members. Special feature of the scheme is that entire premium amount paid by the member is refunded after maturity, i.e., 10 years.

viii.

Rural training institutes: To help the rural youth to stand on their feet, two RUDSETI type training institutes have been established at Gulbarga and Gadag in Karnataka State, to impart training in self employment to youth free of cost.

ix.

SBI staff as SHPI: The main role of formation and nurturing of SHGs have been played by NGOs who, apart from their fundamental role of social service, also aim to make the poor economically self sufficient. But in SBI, our committed work force is not lagging behind and a number of committed staff members have worked hard to form and nurture SHGs on their own.

x.

Appreciation by Government: A number of our branches / Circles have also received commendation and appreciation from various State Governments for doing excellent job in SHG-Bank Credit Linkage programme. NABARD felicitated 15 SHGs at a function organized in New Delhi on 13th September 2005.The function was presided over by the Honorable Union Finance Minister. Out of total 15 SHGs felicitated, 4 were financed by our branches, one each from Orissa, Jharkhand, Madhya Pradesh and Uttaranchal.

xi.

Samanwita: Bank has sponsored and financially supported NGO SAMANWITA in collaboration with Government of Orissa for supplementing the process of socio 67

economic upliftment of the tribals and the downtrodden in the poorest and most backward Kandhamal district of Orissa State where 52% of the population is that of tribals. Core activities performed by Samanwita is empowerment of people through .promotion of SHGs, especially women SHGs and development of human resources. xii. SHPI status: State Bank of India is the first Commercial Bank to which NABARD has recently given SHPI status. Future Plans SBI has set for itself an ambitious target of credit linking 1 million SHGs up to March 2008. The Bank has started to leverage our vast SHG network for various services beyond credit delivery CORPORATE Social Responsibility (CSR) is gaining importance in the world of globalization with increased number of informed citizens and changing social expectations. With a strong linkage and correlation between CSR and business, between social empowerment and commercial sustainability, the Confederation of Indian Industry (Northern Region) and the YES Bank have jointly brought out a knowledge report on CSR as a tool for inclusive growth, social equity and affirmative action. CII Northern Region chairman Deep Kapuria says CSR is an important business strategy because wherever possible consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies, employees want to work for companies they respect and NGOs want to work with companies seeking feasible solutions and innovations in areas of common concern. He said in conjunction with a development paradigm that ensures sustainable growth, CII works with strategic partners to build on shared synergies, conserve the environment and create sustainable value in sync with its unique theme for the year, Building people, building India. YES Bank MD and CEO Rana Kapoor claimed that the bank has identified itself in a leadership position in the countrys march to economic and human development. YES Bank remains committed to assisting stakeholders in developing sustainable and commercially viable CSR projects on a public private partnership (PPP) mode incorporating the principles of social equity and community participation. CSR involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-today decision-making process. It, however, goes beyond the occasional community service action as CSR is a corporate philosophy that drives strategic decision-making, partner

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selection, hiring practices and, ultimately, brand development. The report points out that CSR is now being looked at as a concept different from pure philanthropy and more in tune with strategic intervention that ultimately benefits industry. CII has adopted the visionary route of formulating a code of conduct for affirmative action. The company affirms its recognition that its well being is interlinked to all sections of the society. The company believes in equal opportunity in employment for all sections of society and considers it a component of its growth and competitiveness. HSBC Climate change is an important issue for HSBC to understand and there is a clear need for them to manage its impact for the bank, its employees, customers and stakeholders. The global HSBC Climate Partnership created in collaboration with Earth watch, the Climate Group, World Wide Fund for Nature (WWF) and Smithsonian Tropical Research Institute helps understand the impacts of climate change on people, forests, cities and water. Locally, the bank has created Earth Sciences Forum as a public private partnership which is succeeding in bringing together key stakeholders to find adaptation and mitigation solutions to climate change. HSBC employees volunteer enthusiastically on a number of environment initiatives and more recently, HSBC participated countrywide in celebrating Earth Hour on March 28. Corporate Social Responsibility, Sustainable Development & Non-Financial Reporting Role of Banks At present, the world over, there is an increasing awareness about Corporate Social Responsibility (CSR), Sustainable Development (SD) and Non-Financial Reporting (NFR). Consequently, there is a concerted effort among all types of organizations, to ensure that sustainable development is not lost sight of, in the pursuit of their respective goals - profit making, social service, philanthropy, etc. CSR entails the integration of social and environmental concerns by companies in their business operations as also in interactions with their stakeholders. SD essentially refers to the process of maintenance of the quality of environmental and social systems in the pursuit of economic development. NFR is basically a system of reporting by organizations on their activities in this context, especially as regards the triple bottom line, that is, the environmental, social and economic accounting.

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The contribution of financial institutions including banks to sustainable development is paramount, considering the crucial role they play in financing the economic and developmental activities of the world. In this context, the urgency for banks to act as responsible corporate citizens in the society, especially in a developing country like ours, need be hardly overemphasized. Their activities should reflect their concern for human rights and environment.

Global warming and climate change are particularly important in the context of sustainable development, especially for developing countries, which tend to be ill-equipped for such changes. According to recent studies on climate change, the majority of Asian companies are largely oblivious to the risks posed by climate change issues to their business models and the environment. Nearly two-thirds of the respondent companies were given a zero score for their approach to climate change. The findings suggest that, generally, Asian businesses are far behind their US and European rivals on this issue. Another joint study by Asian Development Bank (ADB), UNDP and ESCAP on the 'Millennium Development Goals (MDG): Progress in Asia & the Pacific 2007' shows that on environmental sustainability, which is one of the eight goals of the MDG, India has regressed in the matter of carbon dioxide emission and consumption of ozone-depleting CFCs Bank Of India Bank of India has always been a pioneer and taken the lead in helping the poor, deprived and under-privileged sections of society. The Bank, being a major public sector bank, always endeavours to strike a viable equilibrium between its commercial objectives and social responsibilities. The Banks commitment to the community and society at large, and its earnestness in pursuing social causes is reflective of its corporate social responsibility agenda of which FINANCIAL INCLUSION has now assumed considerable emphasis.

Why Financial Inclusion? Is the first question that comes to ones mind? The answer to that is any growth strategy that does not pay attention to the inclusive growth of the millions of the under-privileged people is not sustainable. Hence, Bank of India has taken up financial inclusion as a social cause and is implementing the same as a mass movement. Given the economic status of the rural people, the spread of the population in remote inaccessible villages and pockets, the standardized brick and mortar structure cannot possibly cover all the 70

people, hence the Bank in order to give greater thrust and acceleration to its mission to uplift the downtrodden sections of the society and enhance scalability, has embarked upon an eenabled financial inclusion scheme. This will ensure that excluded and poor people are brought into the fold of the formal banking system at a rapid pace. Banking the unbanked is also another interpretation of financial inclusion, which involves delivery of banking services at an affordable cost to the vast sections of the disadvantaged and low income groups. In fact, financial inclusion has become the buzzword and predominant issue, drawing the attention of the present day policy makers and officials of Reserve Bank Of India (RBI). The RBI, has issued a number of directives and initiated several policy changes in order to bring the unbanked, mostly the poor, the downtrodden and marginalised sections of society into the mainstream of the formal banking fold.

A few of the measures initiated by BOI include: Simplification of KYC norms for BPL segment; Provision of banking services through business facilitators (BFs) and business correspondents (BCs) in inaccessible rural areas; Enhancing the scalability of financial inclusion through electronic connectivity, handheld devices and biometric smart cards; and, Opening no-frills accounts for the poor. All this are a pointer towards financial inclusion as an essential pre-condition for building sustained and inclusive economic development, ushering in greater economic and social equity and a vital instrument to bridge the inequality prevailing in society. However, it has to be immortally remembered that relief measures, subsidy linked programmes and spending on social causes are excellent, but the same can be sustained only if it is linked to eradication of poverty and results in economic growth and empowerment of common people. Bank of India has taken up financial inclusion as a social cause and is implementing the same as a mass movement. Since the standardized brick and mortar structure cannot possibly cover all, the Bank has embarked upon an e-enabled financial inclusion scheme.

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Even though the path to financial inclusion continues to be daunting without any short cuts, Bank of India has made big strides in its implementation. The Bank till date has opened 2.5 million no-frills accounts. To facilitate access of the banking system to people living in remote pockets and belonging to backward sections of society, the Bank has leveraged technology through the system integrator, Integra Micro Systems, and till date issued 80,000 biometric smart cards, which are voice enabled so as to give a voice message to the illiterate persons, who understand the language but can neither read nor write.

This has obviated the hurdles and stumbling blocks like cost of transportation, loss of daily wages and other incidental expenses for the poor people in getting the intended benefit.

Implementation of the financial Inclusion programme has positively impacted the lives of millions of under-privileged and deprived people. The benefits that have accrued are immensely satisfying to the Bank and they include: Impacts poverty reduction positively; Enables the poor to build assets and thereby reduces their vulnerability; Empowers women and enhances contribution to household income, enabling better control over household decisions; Dependence on non-formal, high cost intermediaries reduced; Aids greater spending on education and health; and, Reduces child mortality and leads to improved health, especially among women.

Extending the banking habit among the less privileged in urban and rural India to wean them away from unorganized money markets and moneylenders brings in a wholesome enhancement in the quality of life. In consonance with the directives from the Government and the Reserve Bank of India, the Bank has already charted out its future roadmap, which includes urban financial Inclusion and striving for 100 per cent financial inclusion at the earliest in all 48 lead districts, where the Bank has lead responsibility. The Bank has already achieved 100 per cent financial inclusion in six districts and another seven lead districts are on the verge of achieving 100 per cent financial inclusion by opening no-frills savings accounts.

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Inclusive growth is linked to many factors, hence a macro approach, in other words a holistic view needs to be taken. Along with financial inclusion, Bank of India has introduced several novel schemes such as solar energy home lighting systems for use of renewable energy sources; Nirmal Gram Yojana for a clean and hygienic environment as the bank believes in the paradigm health is wealth; ABHAY, credit counselling centres for the debt trapped and other financial literacy programmes; and Star Swarozgar Prashikshan Sansthan for development of entrepreneurship and skills. The Bank has set a target of 4 million no-frills accounts by March 2010, which it will achieve. The Bank true to its slogan Relationship beyond Banking is ready to overcome any obstacles in the way of financial inclusion. YES BANK YES BANK, as a Bank for Emerging India has a philosophy to contribute positively to Indias development. Responsible Banking is one of the pillars of the YES BANK value proposition to our customers and is a key differentiating factor within our competitive strategy. By internalizing and externalizing CSR and Sustainability, the Responsible Banking team will help to build YES BANK as an organization of enduring value, enhancing its competitiveness, and charting a high leadership growth trajectory. Recently YES BANK CSR practice has been awarded the Social and Corporate Governance Award by BSE/ NASSCOM . About YES BANK: YES BANK, Indias new age private sector Bank, is the outcome of the professional commitment of its Founder, Rana Kapoor and his highly competent top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to Emerging India. YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued customers. A key strength and differentiating feature of YES BANK is its knowledge

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driven approach to banking and an unprecedented customer experience for its retail and wealth management clients. YES BANK is steadily building corporate and institutional banking, financial markets, investment banking, business and transactional banking, retail and private banking business lines across the country. The Banks constant endeavour is to provide a delightful banking experience expressed with simplicity, empathy and totality. CSR Efforts of State Bank of Bikaner & Jaipur As a Corporate Social responsibility (CSR), the State Bank of Bikaner & Jaipur, continues to undertake various community based social activities. In order to extend financial support to the needy parents of meritorious girl children, a need has been felt that our Bank should provide financial support by way of stipend to such school going girl children. A scheme has been formulated by the Bank to help the girl children pursuing studies in Government school by providing financial support in the form of stipend of Rs.500/- per month. For this purpose each branch of State Bank of Bikaner & Jaipur will adopt one girl child each pursuing education in 6th standard onwards in a Govt./municipal school. The basis of selection is merit cum need. J & K Bank CSR Aspect of the Bank

The Corporate Social Responsibility (CSR) of the J&K Bank seeks to recognize obligations towards society and aims to integrate the CSR ideals into its mission for optimizing both business and social performance. It stresses on promoting work life balance, give attention to social and environmental concerns and host of factors that facilitate business pursuits and accomplishment of economic goals. The CSR is not just recognized as promulgating the Bank's own values and principles of philanthropy but also the values and principles of all those who have a stake in it or are affected by its operations. By supporting social cause aligned to the mission the CSR strategy differentiates the Bank's brand and enhances its reputation. The Bank manages social issues in the same manner as any other strategic business issues.

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The Bank besides playing its role in economic development of the State and country contributes significantly towards the social cause. The Bank has established its credentials for the poor and needy by donating generously for various philanthropic activities aimed at ameliorating their sufferings. Be it victims of natural calamity, like fire, flood, snowstorm or tsunami and disabled or patients with serious ailment who lack reliable means of survival, the bank has been all through supporting them. The one and a half decades long turmoil in the State of J&K has added to the agonies of people with hundreds of children losing their parents to fend for themselves in this harsh world. The Bank realizing its responsibility of saving the life/ future of these blooming children, adopt several of them by providing financial support either through various orphanages where they are sheltered or directly to the orphans by bearing their educational or other expenditure. The Bank would continue to provide study scholarships to the poor and needy students including students from far-flung areas, who without such support would have been school dropouts. The Bank shall continue donations for the development of infrastructure (computers, books, TV's, prosthetic support etc) to various NGOs, societies, trusts, institutions, etc. involved in socioeconomic development of the society. The physically challenged persons belonging to socially and economically deprived classes especially children shall be helped by acquiring prosthetic support by meeting partly or fully cost of surgery with pre and post medication.

In order to enable socially and economically weaker classes to live a healthy life the bank shall endeavor to give financial support to the needy and poor patients, afflicted with dreaded diseases like Cancer, cardiac failure, Kidney failure etc. for their treatment / surgery.

Heritage preservation is an important responsibility of every conscious individual, institution or agency. The thrust areas to assist in this respect for the Bank will be preservation of historical/religious monuments, development of tourist sites, national properties, museums, libraries, protection of environment/ecology etc. and sponsoring seminars and awareness camps, art and literary works, 3rd cultural activities, social service camps, college or university students clubs etc.

The Bank has been playing a vital role in the promotion of tourism and it is in this backdrop that the Bank has been shouldering the responsibility of registering yatris for the Shree Amarnathji Yatra through its extensive network of branches spread across the country. The yatra is an annual religious function of Hindu community, wherein 75

devotees travel by foot to pay obeisance to Holy Shiv Lingam at Shree Amarnathji cave. The Bank puts in place special registration counters at all branches of the Bank outside the state and some selected branches in Jammu and Kashmir State. In addition to this, accidental insurance cover facilitity of Bajaj Allianz General Insurance Co. Ltd. to the pilgrims at a nominal premium is made available to the yatris. During the yatra, the bank establishes mobile branches even at the holy cave. People in general and pilgrims in particular all over the country have appreciated this effort and won lot of applause for the Bank . Apart from above activities the Bank has been constructing/developing the public utility service like public parks, bus stands, drinking water posts, lavatories, conveniences, rain shelters. In addition to this, the bank organizes relief camps, service camps, night shelters, health resorts, health clinics, disaster & calamity management centers, rehabilitation centers etc. Policy With the objective of promoting the philanthropic activities, other social and environmental issues, the bank has a CSR policy in place embodying the broader principles for providing donations. The donations are made within the prescribed limit of 1% of the published profit for the previous year. It focuses on economic, social, cultural and geographical backwardness of the area. Key Features

The bank provides financial assistance for the benefit of Handicapped persons/ orphans/ poor patients suffering from serious ailments.

Provides direct assistance or through Prime Minister's Relief Fund or Chief Minister's Relief Fund or any other national level or state level calamity relief fund to needy who have suffered due to natural disaster and calamities.

Helps in rehabilitation of handicapped children/ persons belonging to depressed classes of society.

Provides for procurement of devices / apertures for kidney transplantation; cardiac interventions; cancer patients; AIDS HIV and other dreaded diseases, philanthropic support for people belonging to economically deprived sections of the society.

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Provides financial support to orphanages. Provides scholarships to meritorious students of depressed sections of the society at various levels with focus on the needy.

Provides technical and financial support for the Heritage Preservation through sponsorship of awareness seminars, organizing social service camps, sponsoring Art & Literary works and preservation and development of important Historical, religious, tourist sites, museums, libraries, archives, scientific organizations and National properties.

Provides financial assistance for protection of Environment/ecology. Constructs and develops the public utility services like bus stands, development of parks, construction of drinking water posts, lavatories, conveniences etc.

The donations are directly made to depressed class of society including physically challenged person or through a Non Governmental Organization engaged in the ameliorating of the suffering of this class of society.

To ensure transparency in selection of deserving beneficiaries followed by disbursement of proceeds to the donees, the following precautionary measures are also ensured.
o

The applicant should not be an employee of any Institution, semi-Government, quasi- Government or Government organization entitled to Medical Aid benefits.

o o

The applicant is not a professional beggar. The applicant is not a dependent family member of Bank's own staff.

The Bank's CSR is rooted in its Corporate Governance philosophy, which in turn is woven around Bank's commitment to ethical practices in the conduct of its business, while striving in the constant quest to grow with profits and enhance shareholders value and align interests of the shareholders, stakeholders and society through adoption of best international practices and standards. Managing CSR is not viewed as an extra cost or burden but is viewed not only as making good business sense but also contributing to the long-term prosperity of our Bank and ultimately its survival. Being a good neighbour and showing that you care on the one hand and being a successful business on the other, are flip sides of the same coin.

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The Bank donated Rs.one lakh to Maharaja Ranjit Singh Trust, New Delhi, for the upliftment of downtrodden sections of the society. The Bank gave donation to the Foundation for inter-community Relations Delhi for upliftment of society. A financial assistance to the tune of Rs.1.00 lakh for the welfare of Gujjars was given to Gurjar Desh Charitable Trust, Jammu. The Bank donated sewing machines to destitute widows through Bhartiya Dalit Sahitya Academy, Jammu. Showing its eagerness for the upliftment of women, the Bank donated embroidery machines to Women's Welfare Society, Kachhama, Kupwara. The Bank also gave donation to NGO Friends Association for Ladies and Orphans Welfare (FAOW), Srinagar.

Devastating fire in village Batpora (Wathora), Kashmir rendered hundreds of people homeless and two persons lost their lives. The Bank organized a relief camp and distributed 50 kgs of rice and Rs.5,000 to each of the affected family. Similarly, another relief camp was organized for the fire victims at Seer, Anantnag (South Kashmir), where blankets, eatables and domestic utensils were distributed among the sufferers. A camp was also organised by the Bank at Lasipora, Pahalgam, where cash was distributed among the fire victims.

With a view to help Kargil war sufferers of Drass area in Ladakh region in their rehabilitation, the Bank organized a relief camp. Blankets and eatables were distributed among the people covering about 1500 families settled in 17 villages in and around Drass, who had migrated to Sankoo, Saliskote and other far flung areas of Kargil. Stationery items were distributed among the school going children.

GLIMPSES OF SOME PROGRAMMES1. Poverty Alleviation Programme Objective: To educate and provide the underprivileged sections financial services through intervention and community participation. Poverty is an age old and worldwide phenomenon. It affects the quality of life of the people in the society in one form or other. India is a developing country with huge percentage of population living below poverty line. India has a massive poverty.

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The

analysis

of

poverty

scenario

in

India

is

complex sector,

one.

The

unemployment/underemployment,

underdeveloped

agricultural

unbalanced

development with huge regional imbalances, illiteracy, shortage of capital, lack of entrepreneurs, etc are some of the major causes of poverty in India. Keeping this in view, the Bank during the year 2005-06 launched a comprehensive programme for upliftment of poor and to raise the living standard of masses and ameliorate their socio-economic conditions so as to achieve balanced economic growth with social justice. Bank targeted those people who have certain entitlements in the form of productive assets, education & skills, the possession of which otherwise can generate incomes to buy the food requirements above the subsistence level. However, the programme recognized that poverty cannot be eradicated by relief. It needs to be removed through creation of productive employment opportunities and other social conditions. Productive employment generates growth, creates assets and thus improves the economic conditions of the poor who get engaged in such pursuit. At the same time, growth through productive employment creates a multiplier effect for bringing about a change in the economic scene. Further, poverty originates in villages and Bank took various initiatives to contain it there so that its overflow to towns and cities in the form of social migrations and slum dwellers is stopped. Therefore, the focus of Bank's poverty eradication programme 'WE ARE FOR THE POOR' was rural centric. Under the programme, the Bank undertook number of initiatives to raise the standard of people and alleviate poverty. The programme covered areas of agriculture, horticulture, village and cottage industries, fisheries, tourism, handicrafts on one hand and promotion of health, sanitation, communication and education on the other. 2. Environmental Excellence Programme Objective: To preserve and promote green & pollution free environment. In the last few years environmental degradation has reached to immense proportion owing to unabated exploitation of nature and natural resources. The major factors responsible for degradation of environment in India have been heavy industrialization, deforestation, increase

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in traffic in cities, population explosion, illiteracy, etc. Accordingly, in order to preserve environment and promote pollution free environment, the Bank has launched a comprehensive programme to preserve and promote green & pollution free environment. Under the programme, the bank undertook number of measures like planting trees, developing parks and gardens at barren lands, undertaking cleanliness drives etc. Awareness camps are organized on continuous basis at number of places to educate people to keep their environment clean The preservation of environment is a top most priority for the Bank. The Bank has been playing a pivotal role in protecting the environment by organising cleanliness drives throughout the country particularly in the state of J&K. During "Plantation Week" massive plantation drives are organised at various parts of the Jammu and Kashmir State. On the eve of World Arboriculture Day, the a massive plantation drive was undertaken at Badamwari, Srinagar where almond sapling were planted. The plantation drive at Badamwari was undertaken as a part of the Bank's plan to revive the famous almond garden, which had lost its fame over the years due to negligence and oblivion. Nostalgic feelings about the past had never been so strong as they were on March 25, 2008 when J&K Bank dedicated the revived and redesigned pride past of Kashmir, Badam Vaer to the people of Kashmir. Developed around the famous Waris Khan Chah , Badam Vaer is a solid reminder of the past and a walk around it refreshes and resurrects the sense of history. The Bank has been extending support to municipalities and hospitals in Srinagar and Jammu cities for ensuring better hygienic conditions. The Bank developed a public park at Iqbal Park, Srinagar. The park at one time was in a dilapidated condition and a thriving place for all kinds of insects. Even the garbage of most of the areas of the city was being dumped in the park and also main vegetable & fish market used to operate in the park. The park had become nuisance for people in general and residents of area in particular as foul smell used to emanate from the park. The park is now presenting a new look and has become a major attraction for people, which reflects the J&K Bank's environmentalist approach. The Bank has converted barren piece of lands into green pastures in the state. The bank has developed children's amusement park in the world-renowned hill station of Pahalagam in the heart of Kashmir valley. The park not only commensurate fully with the flora & fauna of the place but also complements the natural scenic beauty of the place. The park is spread over an area of 42 kanals, where different kinds of rides have been installed for children over an area of just three Kanals. The 80

majority of area of the park has been developed as Landscape. The arcade and restaurant have been constructed in such a manner that they fully blend with the natural scenic beauty of the place. The park also encompasses an artificial lake of about 15,000 square feet area where the visitors enjoy swan boat rides. The main attraction of the park, however, is a musical fountain which has been established just at the arcade. A baby train is something that every child loves to board and enjoy. The entire project was completed in a record time of four months only. The Bank developed another amusement park "Bagh-I-Wazir", Bun Bagh, Anantnag, Kashmir. Different kinds of rides have been installed in the park for children. In a short span of time, the park has become a major tourist attraction in the region. The bank also has plans to establish such types of leisure and pleasure destinations in other tourist places of the state as a supplement to ecological/environmental development. The development of Rajinder Park at Ranbir Canal and a walk way along the canal has delghited the people. In order to stop the wastage of water, the Bank donated Rs.1.00 lakh for construction of service reservoir at Spring for the people of Seer, Anantnag, Kashmir. Due to the efforts of the Bank, more than 200 families were able to get pure drinking water in the area. The Bank organized sanitation and cleanliness drives in Srinagar and Jammu cities. Similar drive was organized at Sher-I-Kashmir Institute of Medical Sciences (SKIMS). 3. EDUCATION FOR ALL PROGRAMME. Objective: To promote education among the employees and the deprived sections of the society. In order to promote talent and creativity among the youth, the Bank sponsors various such programmes where they are encouraged to explore their talent and creativity. The Bank provides financial assistance to the bright students belonging to poor families so as to help them to complete their education. Since the last year, the Bank has adopted number of students to bear their educational expenses. The Bank also provides financial and other kinds of support to those organizations that are involved in the process of promoting education across the country. The Bank donates computers and other kinds of equipments to schools and other educational institutions from time to time. Recently, a poor student of Rajouri got admission in Government Medical College Jammu. The Bank extended him financial help for the purchase of books. Similar assistance was given to a poor student to pursue his M.Sc

81

Chemistry in Kashmir University. The Bank also bear house rent, bus fare, examination fee and tuition fee of a poor student pursuing studies in SKIMS Medical College. Similarly, a student hailing from Rajouri pursuing his studies in Engineering was provided financial assistance to the tune of Rs.13,000. The bank has extended a number of scholarships to deserving Kashmir University students. The Bank has provided books free of cost to the students of Government Medical College, Srinagar, who had lost all their belongings including books in a devastating fire that engulfed the College Hostel. The bank has adopted nine orphan children from Shehjar Orphanage and is bearing all expenses related to their studies. In this age of Information Technology, the Bank is making efforts to take computer education to far flung areas for poor students. The Bank has been generous to donate computers to Apna Ghar orphanage at Beerwah (Budgam), VAZR School at Kupwara, Law Department (Kashmir University) and Sultan-ul-Arfeen Trust (Srinagar). A physically handicapped student hailing from Anantnag was given a computer node by the Bank. ABN AMRO BANK ABN AMRO stands out from its peers in the sector. The bank has made significant progress in integrating its sustainability criteria throughout its business units and subsidiaries, to reduce lending and investment risks, as well as contributing to product innovation. It lends at favorable rates for environmental projects, sustainable construction and corporate environmental improvements, and is active in microfinance. It has been heavily involved in global initiatives on sustainable finance, including as one of the initiators of the Equator Principles, a set of voluntary guidelines for managing social and environmental issues related to the financing of development projects. ABNs lending in developing countries is based on World Bank guidelines and in August 2002, it announced that it was placing limits on the level of environmental risk it would accept in lending to mining, oil and gas and forestry projects. The bank has previously pulled out of investments, such as the Maheshwar Dam project in India, due to social and environmental concerns, and ABN has now publicly formalized its commitment through its role in the Equator Principles.

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Ambitious goals include the 2006 objective to improve energy efficiency by 25% and a 100% waste re-use/recycle/waste-to-energy target. The traditional governance system is wellstructured and has been further strengthened in accordance with recent new Dutch and US governance codes. Given its long positive track record, minimal regulatory problems, leading business practices and continual engagement in the evolving challenges presented by sustainable finance, ABN is the clear leader in addressing corporate social responsibilities within the banking sector.

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CHAPTER-3 RESEARCH METHODOLOGY AND ANALYSIS

3.1 RESEARCH METHODOLOGY DEFINED Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In this we study the various steps that are generally adopted by researcher in studying this problem along with the logic behind them.

3.2 RESEARCH DESIGN

The research design selected is of descriptive type. Data is collected through Primary and Secondary sources.

Primary SourceA Questionnaire is prepared to study the awareness of various CSR activities among the employees of various Indian banks. The questionnaire was a made on a five point scale ranging from strongly agree to strongly disagree. Various demographic details like age, gender, designation of the employees have also been found out through the questionnaire to analyze their impact on the awareness of the CSR activities among the employees. Also, some open ended questions also formed the part of the questionnaire in order to make adequate conclusions and recommendations.

Sample Size A sample size of 80 employees has been used for the purpose of my study. The questionnaires were being filled from eight banks; ten employees each, from middle and lower level of their respective banks.

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Statistical Tools Various statistical tools have been used for the purpose of the study which is as follows: Mean Mean of all the statements has been calculated and has been ranked which helps us to analyze. The statement with the highest mean is ranked 1 and is considered to be the most favorable one i.e., maximum number of respondents agree with that statement, similarly, the statement with the lowest mean is ranked last and is considered to be the least favorable one i.e., minimum number of respondents agree with the statement. Median Total of each respondent is taken out in order to find out the median. Median has been used to find out the respondents who have a total score of less than the median and who all have a total score of more than the median. Chi Square Method On the basis of median association between the various demographic factors and the awareness among the employees has been found out using chi- square method.

Secondary SourceJournals and articles in the magazine, news paper and internet have been used to give a layout of various CSR activities that the few Indian banks are practicing.

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ANALYSIS OF THE DATA 3.3 ANALYSIS 3.3.1 Sample Description Age:

Figure 3.3.1(1)

35% 20-30 Years 30 and above 65%

There are 52 respondents or 65% respondents out of the total sample size of 80 under the age group 20-30 years who have filled the questionnaire and 28 respondents who are of age group 30 years and above.

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Gender:
Figure 3.3.1(2)

24% Males Females 76%

There are 61 or 76 % males out of a total sample size of 80 who have filled the questionnaires and 19 or 24 % females.

Designation:

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figure 3.3.1(3)

35% Middle level Lower level 65%

There are 52 or 65 % of employees of middle level out of a total sample size of 80 who have filled the questionnaires and 19 or 24 % of employees of lower level. 3.4.2Analysis of a few statements Fulfillment of responsibilities to consumers
Figure-3.4.2(1)

14% 41%

Strongly Agree Agree Dont know

45%

From the above pie chart the analysis shows that 41% respondents strongly agree for the above statement, 45% agree, 14% dont know about it and 0% disagrees with it. Sustainable corporate culture

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Figure 3.3.2(2)
8% 0% 10% 18%

64%

Strongly Agree Agree Dont know Disagree Strongly disagree

From the above pie chart the analysis shows that 18% respondents strongly agree for the above statement, 64% agree, 10% dont know about it and 8% strongly disagree with it.

Resource cycling and waste reduction

Figure 3.3.2(3)

5% 4% 16%

33%

42%

Strongly Agree Agree Dont know Disagree Strongly disagree

From the above pie chart the analysis shows that 16% respondents strongly agree for the above statement, 42% agree, 33% dont know about it, 4% disagree with it and 5 % strongly disagree with it. Information Disclosure/Communication

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Figure 3.3.2(4)

13% 5% 5%

16%

Strongly Agree Agree Dont know Disagree Strongly disagree

61%

From the above pie chart the analysis shows that 16% respondents strongly agree for the above statement, 61% agree, 5% dont know about it, 5% disagree with it and 13 % strongly disagree with it.

Engagement of the Banks in CSR activities

Figure 3.4.2(5)

46% 54%

fully engaged Partially Engaged

There are 37 or 46% respondents according to whom their respective bank is fully engaged in CSR activities and 43 or 54% respondents according to whom their respective company is partially engaged in CSR activities.

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CSR Reported and Published

Figure 3.3.2(6)

80 70 60 50 No. of 40 Respondents 30 20 10 0 Yes No

The analysis shows that 45 respondents are aware and agree that the CSR activities are reported and published whereas 35 say that it is neither reported nor published. 3.3.3 Analysis with Mean and Rank MEAN of each statement is taken out for all respondents, using the formula below Mean = X/n, where N is the total of each statement and n is the number of respondents. On the basis of the means ranking is done Statement Fulfillment of responsibilities to consumers Formation of safe, healthy work environment Contribution to regional lifestyles Equality of opportunities Continuity and creation of regional culture Balance between work and personal life Sustainable corporate culture (Figure-3.4.3) Mean 4.275 4.2875 3.325 3.675 3.225 3.3875 3.85 Rank 2 1 20 10 21 19 5 8

Support for environmental and social activities of 3.7375

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suppliers Resource cycling and waste reduction Reduction of environmental burden-transportation Prevention and remediation of soil contamination Reduction of green house gases that lead to Global Warming Preservation of water resources and water quality Reduction of environmental burden- product and services Preservation of bio-diversity Quantitative material and energy data Compliance Corporate Governance Risk Management Education to society Management Philosophy Information Disclosure/Communication 3.525 3.6 3.65 3.9 3.7 3.7875 3.525 3.6375 3.6375 16 15 11 3 9 7 17 12 12 3.5875 3.8875 16 4 3.825 3.6125 3.4625 6 14 18

3.3.3.(1)Analysis with Mean 1. Fulfillment of responsibilities to consumers - 4.275 This shows that maximum respondents agree to the above statement. 2. -Formation of safe, healthy work environment- 4.2875 This shows that maximum respondents agree to the above statement. 3. Contribution to regional lifestyles- 3.325 This shows that maximum respondents dont know about the above statement..

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4. Equality of opportunities- 3.675 This shows that maximum respondents agree to the above statement. 5. Continuity and creation of regional culture- 3.225 This shows that maximum respondents dont know about the above statement. 6. Balance between work and personal life- 3.3875 This shows that maximum respondents dont know about the above statement 7. Sustainable corporate culture- 3.85 This shows that maximum respondents agree to the above statement. 8. Support for environmental and social activities of suppliers-3.7375 This shows that maximum respondents agree to the above statement 9. Resource cycling and waste reduction- 3.825. This shows that maximum respondents agree to the above statement. 10. Reduction of environmental burden-transportation- 3.6125.This shows that maximum respondents agree to the above statement 11. Prevention and remediation of soil contamination-3.4625.This shows that maximum respondents dont know about the above statement. 12. Reduction of green house gases that lead to Global Warming- 3.5875. This shows that maximum respondents agree to the above statement. 13. Preservation of water resources and water quality-3.8875.This shows that maximum respondents agree to the above statement. 14. Reduction of environmental burden- product and services-3.525. This shows that maximum respondents agree to the above statement. 15. Preservation of bio-diversity-3.6. This shows that maximum respondents agree to the above statement.

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16. Quantitative material and energy data-3.65. respondents agree to the above statement

This shows that maximum

17. Compliance- 3.9. This shows that maximum respondents agree to the above statement 18. Corporate Governance-3.7. This shows that maximum respondents agree to the above statement. 19. Risk Management- 3.7875. This shows that maximum respondents agree to the above statement. 20. Education to society 3.525. This shows that maximum respondents agree to the above statement. 21. Management Philosophy- 3.6375. This shows that maximum respondents agree to the above statement. 22. Information Disclosure Communication- 3.6375. This shows that maximum respondents agree to the above statement.

3.3.3(2) Analysis with Rank The above analysis show that respondents have highest perception about the CSR activity: formation of safe, healthy work environment existing in their organization and have the lowest perception for the CSR activity: Continuity and creation of regional culture in the organization. 3.3.4 Analysis with median In order to find out the median total scores of each respondent is taken out and values of totals are arranged in ascending order and median is taken out using the formula given below Median for even numbers = N+1/2 81/2= 40.5 Now 40th term + 41st term/2

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83+83/2 = 83. Therefore 83 is the median value Hence, the number of values less than median and number of values greater than equal to median are found out.

Figure 3.3.4 80 60 No. of 40 Respondents 20 0 Less than 83 More than 83

The Median value of total scores = 83. The analysis shows that 39 respondents have a total score of less than 83 and 41 respondents have a total score of more than 83. 3.3.5 Association between age and the awareness of CSR activities among the employees in various Indian banks This has been done using Chi-Square method Null Hypothesis Ho= Age has no implication on the awareness of CSR activities among the stakeholders. Alternate Hypothesis H1= Age has an implication on the awareness of CSR activities among the stakeholders.

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We

20-30 years Respondents having total score of less than 83 Respondents having total score of more than or equal to 83 Total 22 52 19 28 41 80 30 9 39 30& above Total

now

calculate the 2: For this we calculate (O) and (E): observed and expected values, and (OE) 2: Applying the formula

(Table 3.4.5) Observed Frequencies (O) 30 22 9 19 Expected Frequencies (E) 25.35 26.65 13.65 14.35 21.6225 21.6225 21.6225 21.6225 0.853 0.811 1.584 1.507

=4.755

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We get the computed value of chi-square (2) = 4.755. Degrees of freedom => (R-1) (C-1) i.e., (2-1) x (2-1) =1 The critical value of 2at 10% level of significance for 1 degree of freedom is 2.71 {(2calculated=4.755 and 2 table= 2.71)} Interpretation Since the calculated value is more than the table value, therefore the hypothesis is rejected. Thus age has an implication on the awareness of CSR activities among the stakeholders. 3.3.6 Association between gender and the awareness of CSR activities among the employees in various Indian banks Null Hypothesis Ho= Gender has no implication on the awareness of CSR activities among the stakeholders. Alternate Hypothesis H1= Gender has an implication on the awareness of CSR activities among the stakeholders.

Male Respondents having total score of less than 83 Respondents having total score of more than or equal to 83 Total 34 61 27

Female

Total

12

39

7 19

41 80

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We now calculate the 2: For this we calculate (O) and (E): observed and expected values, and (O-E) 2: Applying the formula

(Table 3.4.6) Observed Frequencies (O) 27 34 12 7 Expected Frequencies (E) 29.74 31.26 9.26 9.74 7.51 7.51 7.51 7.51 0.253 0.240 0.811 0.771

=2.075 We get the computed value of chi-square (2) = 2.075. Degrees of freedom => (R-1) (C-1) i.e., (2-1) x (2-1) =1 The critical value of 2at 10% level of significance for 1 degree of freedom is 2.71 {(2calculated=2.075 and 2table= 2.71)} Interpretation

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Since the calculated value is less than the table value, therefore the hypothesis is accepted. Thus gender has no implication on the awareness of CSR activities among the stakeholders. 3.3.7 Association between Designation and the awareness of CSR activities among the employees in various Indian banks Null Hypothesis Ho= Designation has no implication on the awareness of CSR activities among the stakeholders. Alternate Hypothesis H1= Designation has an implication on the awareness of CSR activities among the stakeholders.

Middle Level Respondents having total score of less than 83 Respondents having total score of more than or equal to 83 Total 26 52 15 28 41 80 26 13 39 Lower Level Total

We now calculate the 2: For this we calculate (O) and (E): observed and expected values, and (O-E) 2: Applying the formula

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(Table 3.4.7) Observed Frequencies (O) 26 26 13 15 Expected Frequencies (E) 25.35 26.65 13.65 14.35 0.4225 0.4225 0.4225 0.4225 0.017 0.016 0.031 0.029

=0.093 We get the computed value of chi-square (2) = 0.093. Degrees of freedom => (R-1) (C-1) i.e., (2-1) x (2-1) =1 The critical value of 2at 10% level of significance for 1 degree of freedom is 2.71 {(2calculated=0.093 and 2table= 2.71)}

Interpretation Since the calculated value is less than the table value, therefore the hypothesis is accepted. Thus designation has no implication on the awareness of CSR activities among the stakeholders.

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CHAPTER-4 FINDINGS AND DISCUSSIONS

4.1FOLLOWING ARE THE FINDINGS OF THE REPORT Different interviewed banks belong to the so-called innovators and early adopters of environmental principles. They stressed that this requires high financial investments and makes the product price higher. According to these banks this can have a negative effect on their competitiveness. Concerning India, banks are of the opinion that double standards are used. According to one private bank, foreign banks have to fulfill much higher (environmental) standards than Indian banks when investing in projects in India. This brings them in a disadvantaged position in comparison with Indian nationalized banks. Most banks confine environmental implementation measures to in-company measures. Not many initiatives with respect to the supply chain, i.e. product related, were found. Some good practices were found with private banks which work on product stewardship with suppliers and perform impact assessments with respect to their projects or investments. Several private banks participate in an international initiative to apply environmental standards with respect to their private project financing, the so-called Equator Principles. It is not clear yet what the exact implications of these principles will be.

Liability is a sensitive subject. Only one bank explicitly mentions this principle in its guidelines and gave examples of compensation which it provided to local communities for environmental damage. The absence of explicit statements in this field might result from the fact that liability is regulated by law. But often the perpetrator of environmental legislation (even if accidentally) cannot be traced, especially in India where enforcement is low. This results in pollution and no one taking responsibility.

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The banking sector is quite active in incorporating environmental aspects into their policy. This is partly a result of negative publicity in the past. They focus more on the environmental impact of their investments than on in-company measures, because their investment policy has a much larger impact on the environment. Large banks with a sustainability report have developed environmental indicators and have formulated environmental targets. The sector is trying to develop a product-oriented environmental management system. The banking sector has developed the Equator principles, which contain (among others) environmental criteria for private project financing. Most banks take this principle into account with respect to the quality and safety of their products, and less with respect to the environmental impact of their processes, products and services, unless legislation requires so. The respondents have highest perception about the CSR activity: formation of safe, healthy work environment existing in their organization and have the lowest perception for the CSR activity: Continuity and creation of regional culture in the organization. The statements to which maximum respondents agree are: Fulfillment of responsibilities to consumers Formation of safe, healthy work environment . Equality of opportunities Sustainable corporate culture Support for environmental and social activities of suppliers Resource cycling and waste reduction Reduction of environmental burden-transportation Reduction of green house gases that lead to Global Warming Preservation of water resources and water quality Reduction of environmental burden- product and services Preservation of bio-diversity Quantitative material and energy data 102

Compliance Corporate Governance Risk Management Education to society Management Philosophy Information Disclosure/ Communication

The various activities done by the banks with respect to these activities are: Different banks focus on sustainable development to follow on the triple bottom lines of Economic, Environment and People. As a business entity, they aim at improving stakeholder value through improved eco-efficiency of operations, economic upliftment of the communities we operate in, and the efficient use of capital and natural resources.3. The statements about which maximum respondents dont know about their being followed in the banks are Contribution to regional lifestyles Continuity and creation of regional culture Balance between work and personal life

Banks believes that the loyalty and commitment of its employees depend upon the quality of life they are provided with at work and at home. Consistent with the Group Purpose, they declare in their vision statement that they will constantly strive to improve the quality of life of the communities it serves through excellence in all facets of its activities. All the banks have developed manuals to explain their CSR principles to personnel and public. This gives more clarity and transparency on the commitment of the company towards its stakeholders and should be encouraged. It is also a transparent way for a company to discuss its dilemmas in the field of CSR.

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Approach towards different stakeholders Employees Those banks having a CSR policy (written down or informal) communicate these aspects to their employees. They use different methods for internal communication on CSR: Management manuals (most large Multinational Banks) Training Meetings in which the mission statement is shared and discussed with employees Management conferences Internal newsletters

With respect to the daughter banks in India, many banks focus their communication on the management. This is quite logical from a practical point of view, but it incurs the risk that staff at the local level does not absorb the CSR policy in the same spirit as intended by the mother company. The involvement of banks, let alone its employees or other stakeholders, in the development of the CSR policy seems to be quite limited still. Some banks attribute this to the fact that they have not been working in India for such a long time yet. Several banks indicated that they do not have a positive impression of Indian trade unions and therefore preferred not to get involved with them. The presence of trade unions in banks possibly allows employees in the development of the CSR policy of banks, even though a large part of this CSR policy has a direct impact on employees. All interviewed banks have a pro-active attitude towards NGOs. They have initiated some sort of dialogue with NGOs and mainly act on it when they are under pressure. All banks in India indicated that they are regularly approached by local NGOs and representatives of the local community to contribute to community development.

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Large Multinational banks run the risk to become subject to pressure of community leaders who are only concerned with personal material benefits. In order to countervail this against these leaders, the stakeholder suggests that banks use institutional mechanisms that have community participation or help to develop such mechanisms. Several Multinational banks expressed criticism towards the role of NGOs in their dialogue with banks: Recently several international banks formulated the Equator Principles which contain criteria for private project financing. These principles also mention biodiversity, including endangered species and sensitive ecosystems, and land use. A large bank has formulated a biodiversity standard with respect to: protected areas, maintenance of ecosystems and contribution to conservation. Green environment is a relatively new environmental issue and it seem s that banks are more reactive on new CSR issues than pro-active. A reactive approach was demonstrated by Indian banks, which only formulated an investment policy with respect to the preservation of forests after they had received a lot of negative publicity. Banks also expressed expectations towards governments in the field of CSR. Legislation should be unambiguous, transparent and stimulating. Banks did not support this statement with examples in India. Governments should give guidance with respect to political sensitive issues. Sector wide initiatives are another way of stakeholders involvement, namely by improving CSR conditions in the sector and sharing of best practice with other banks. The number of sector wide initiatives on CSR seems to be the largest in the banking sector. More and more banks are adopting CSR criteria in their investment policies, to a large extent under public pressure, but also to limit the investment risks. Since competition is high, banks prefer sector-wide initiatives which enable them to create a level playing field.

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The involvement of the interviewed banks with sector-wide initiatives was quite limited. Corporate Social Responsibility at Citigroup is a little unique in its model. Citibank focuses on sustainable development, and felt that instead of spreading ourselves thin by being everywhere, we should instead focus on areas that are more synergistic to what we do, what we stand for, and where our employees also can contribute.

Transparency and reporting Transparency Banks seem to be very concerned with the issue of adequate transparency towards stakeholders, although it is only a very recent development. There are however many grades of transparency and many banks are more transparent on intentions than on performance and especially on shortcomings. Larger banks have in general developed a pro-active communication, thereby actively seeking contact with their stakeholders. This is less so for the small banks. Media Media used for external communication are: Brochures, Internet, publications (most banks) Sustainability report (few Multinational banks) Presentations at conferences and forums (most banks) Formal complaint system (few banks) Confidentiality A major bottleneck forms the dilemma between transparency at one hand and confidentiality on the other. According to banks, confidentiality has two backgrounds:

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Confidentiality with respect to clients is especially very necessary in the case for banks, and plays also a role with respect to project partners for other banks. Confidentiality is deemed necessary to protect sensitive information from competitors.

According to banks the boundaries between transparency and confidentiality are difficult to define since it is very case related. An example is the financing criteria of banks. Contrary to their finance criteria for the private sector for which they have recently signed the Equator Principles, banks are not transparent on their criteria for projects in the public sector. They argue that banks are not supposed to get involved with politics and that it should be the role of international institutions like the UN to give guidance on political sensitive issues. This means that in the end the banks are the ones who decide if certain information is made public or not. As a result, a lot of information provided by banks stays at an abstract policy level and for NGOs it is hard to obtain insight in CSR criteria, considerations and performance in a specific case. Reporting Reports on sustainability achievements are the latest development: most Multinational banks have just started publishing one or are in the process of composing one. The distinct ways in which the sustainability reports are composed makes comparison difficult for stakeholders. Most of the information has a very general character and quantified data are rare. . (Internal) monitoring: the procedures and practices a bank itself carries out to check that CSR standards have been implemented and are continuously observed by the bank. Auditing: a formal, often periodic examination and cross checking of CSR records within the bank to verify their correctness. Independent verification: the process of verifying code compliance and evaluating CSR conditions. Because the essence of verification is credibility, it must be performed by banks.

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Auditing Auditing on CSR seems to be the concern of only the Multinational banks. Most have formulated CSR targets for their business units and/or daughter banks. These targets are also translated into personal targets for management and employees. In order to implement a proper monitoring system banks consider it necessary to quantify the CSR information. This appears to be quite difficult, especially for social aspects. Banks rely on their suppliers to have a good reputation in the field of CSR. . Many banks currently hire commercial auditing firms or traditional quality auditors. This is often called third party verification. Another criticism against the audit firms currently being used by many banks, is the fact that the banks hire these firms, and therefore, they cannot be considered to be independent from the company in question.

Tables with findings on social CSR aspects Human rights and respect for national sovereignty NGO Principles CSR practice in India Bottleneck: Several Indian daughter banks maintained a distance from political issues and therefore declined to take a position with respect to human rights violations in the country. It concerned banks which mother company has a policy on human rights. . Indian NGOs see it as an obligation of banks to take a stand on human rights violations: Short term interests prevent banks to do so (they want to keep the relation with the government smooth), but it is in the long term interest of the company to speak out: security, productivity and exports get affected, it will have a positive rub-off on public perceptions.

1. Promotion of human rights in host country

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Labour NGO Principles from CSR CSR practice in Indian Banks Bottleneck: Almost all of the visited banks had a According to several banks, employees are interested to join a trade union. Trade unions find it difficult to get into contact with employees when they are not educated. According to the trade unions, working conditions are better where workers are organized. Communication in the Indian culture is more indirect According to a trade union not much collective bargaining takes place because workers try to protect their own job. .

1. Respect and ensure

the freedom of association and trade union. the right to collective

bargaining

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CHAPTER-5 CONCLUSIONS AND SUGGESTIONS

5.1CONCLUSION CSR is a concept whereby financial institutions not only consider their profitability and growth, but also the interests of society and the environment by taking responsibility for the impact of their activities on stakeholders, employees, shareholders, customers, suppliers, and civil society represented by NGOs. Banks must take on new responsibilities that go beyond a simple policy of paternalism vis-avis their suppliers, customers and employees, such as that practiced up until recent times

CSR is very much part of the direct business interest of corporate organizations themselves. Although corporate initiatives for a cleaner environment are definitely on the rise, but there is a need for still greater understanding of what Indian banks are currently doing to demonstrate their sense of responsibility to society. Banks are now expected to perform well in non-financial areas such as human rights, business ethics, environmental policies, community development, and workplace issues. A modern bank realizes that a proactive approach to the environmental impacts of its business activities affects its financial bottom line in the long run. Responsibility towards the environment is a crucial part of CSR. Initiatives such as partnerships with governments, local communities and other stakeholders towards preserving the environment are therefore important ways for a company to humanize the businesses of its business. Financial institutions can do a lot to assist efforts for corporate social responsibility and achieve sustainability. Internal efforts to make day-to-day operations cleaner, more efficient, and supportive of social structures can help. Integrating issues into strategic operations is also important. In this way, financial institutions not only ensure that internal activity is sustainable, but they can also help financing itself become more sustainable. Sustainable finance should be promoted. This can encompass incorporating E&S (environmental and social) assessments into financial analysis, or developing products with an explicit E&S focus, such as sustainable & responsible investment (SRI) funds. SRI

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(sustainable and responsible investment/socially responsible investment) is an investment strategy that identifies investment targets that carry net E&S benefits, or no net E&S detriment, as well as provide financial growth. Sound financing of sustainable economy can be promoted by the banks itself. A lot more can be done by bank so as to practice the corporate social responsibility. The follow up of the Equator Principles and other CSR supporting measures shall be strictly dealt and implemented. Until and unless environmental authorities are serious and stricter about this, the financial institution will face a lot of problems. There would be general social and economic benefits that would accrue to society, if business recognized broader social goals in its decisions.

5.2 SUGGESTIONS

It is vitally important that governments be effective in enforcing national legislation all through their territories, creating a framework through which CSR can flourish. CSR awareness should be spread through various ways like: Through websites providing all the necessary information. Weekly newsflash services. On-line information resource with archives of news clippings/ periodicals/ documents etc. Quarterly newsletter/periodical on the updated CSR activities should be made available Publications in the form of booklets, pamphlets, and books should be circulated. Talks, seminars, workshops and training programmes should be conducted. CSR activities should be regularly published and reported.

Operational CSR aspects Accountability: the focal point in the CSR debate should be accountability of banks rather than responsibility.

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Communication: A valuable aspect of this project is that it has lead to discussions within Multinational banks about CSR issues. Stakeholder involvement: A discussion is necessary to find where different organizations such as consultancies and trade unions can strengthen each others work on CSR. Consultancies on their own can monitor banks behavior but without input and follow-up of trade unions it remains toothless. Trade unions and employees can make use of the technical expertise and more objective fact finding role of consultants.

Business case: The business case for banks with respect to CSR is to a large extent their reputation. They run a large risk if they invest in banks which contribute to environmental degradation and exploitation of labour. Therefore, the best protection for a bank is to know its customers, i.e. the banks or projects they invest in and the people putting money into the bank.

Business case: Banks should realize that costs are not a valid reason not to adopt a CSR policy. The costs will not be enormous, if one compares it for example with the costs spend on advertising. Above that, the benefits will exceed the costs. It is a matter of priorities.

Policy development: The drivers for the CSR policy of foreign banks operating in India should be national, a bottom up approach from daughter to mother company is necessary. The foreign company should not impose the legislation of its home country upon India. On the other hand it is necessary that India brings its legislation in line with international requirements. Concerning the CSR policy certain CSR principles work across countries; these are the so called core principles.

Implementation: CSR is so far a game of heroes and heroines, where mainly the concept is being discussed. It has however not institutionalized yet. The focus in the CSR discussion is now too much on the value aspect (content of the principles), but the process if and how CSR is implemented in the company is much more important.

Monitoring mechanisms: A trade unionist brought forward that CSR from the western perspective entails the assumption that banks and consumers will regulate CSR. There is however no such evidence, and therefore a third way should be

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introduced: social regulation. Market mechanisms will not be sufficient in order to force banks to comply with CSR standards. Even banks which claim to adhere to a code of conduct do not have any process or system to implement the code, monitor it or have it verified. Therefore, social mechanisms are necessary, at par with the expectations of society. From a labour point of view, this mechanism is provided by the right to organise and collective bargaining. Because by definition there will be a conflict of interest among different stakeholders a political process is needed to develop such a social framework. In other words, legislation is deemed necessary to ensure a balance for all concerned parties in the CSR practice of banks. Verification: verification of compliance with the CSR policy is essential. This could be done by a coalition of for example government, NGOs and trade unions. Social CSR aspects Women: The position of specific disadvantaged/marginalized groups like women tends to disappear in the debate on CSR. Their interests may conflict with those of other groups, and therefore need to be specifically addressed. Trade unions: A trade unionist pointed to the fact that the CSR discussion involves a conflict among stakeholders by definition. A company needs to address all but how can it realise this? Workers could play an important role in the monitoring process. Many CSR models have been made but without participation of workers and trade unions. An internal instrument is necessary which involves the workers. Work security: The CSR policy of banks should also address the concept of informal labour in the Indian context.

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Consumer protection: Another hiatus in consumer protection in India is that although there is a consumer protection act, many cases are in the consumer courts for years. If consumers should be educated on CSR it is not effective to approach them on an individual basis. Transparency and communication is needed so that consumers know where the money goes. Also the link between corporate social responsibility and bank debt. We find that firms with the worst social responsibility scores pay up to 20 basis\ points more than the most responsible firms. However, we find that for the majority of firms, the impact of CSR is not economically important. The modest premiums associated with CSR suggest that banks do not regard corporate social responsibility as significantly value enhancing or risk reducing.

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BIBLIOGRAPHY REFERENCES BOOKS: CSR Concepts and Cases, The Indian Experience- Edited by CV Baxi and Ajit Prasad Business Unusual- Changing CSR- RK Pachauri Altered Images- The 2001 stage of Corporate Responsibility, Indian Role Ritu Kumar; David F. Murphy and Biraal Balsari. Profiting from Environmental improvement in Business, An eco friendly kit by Australian Industry published by Environment Australia.

WEBSITES:

http://www.google.co.in/search?=en&q=corporate+social +responsibility& meta http://www.mallenbaker.net/csr/ http://www.mallenbaker.net/csr/csrfiles/definitionhtml/ http://www.bsr.org/ http://en.wikipedia.org/wiki/corporatesocialresponsibility http://drreddys.com/coverview/sustainabledev.htm 3 Adrian Henriques, Ten things you always wanted to know about CSR (but were afraid to ask); PartOne : A brief history of corporate social responsibility (CSR), Ethical Corporation Magazine, http://www.ethicalcorp.com/content.asp 4

R. Edward Freeman & Jeanne Liedtkas Corporate Social Responsibility: A Critical Approach Corporate Social Responsibility no Longer a Useful Concept ; refer Business Horizons, July-August 1991, as retrieved on 25/11/2008

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Gerard Fonteneaus Corporate Social Responsibility: Envisioning its Social Implications Ibid footnote no. 3 ; also refer Lew Jan Olowskis Corporate Social Responsibility: Its history, Ethical justification, And Abuses in the business world, EC3000 Refer http://www.mainstreamweekly.net/article646.html, retrieved on 28/09/08

The Good Company, The Economist (2005-01-20). Retrieved on 2008-25-07 Kytle, Beth; John Gerard Ruggie (2005). Corporate Social Responsibility as Risk Management: A Model for Multinationals (PDF). Social Responsibility Initiative Working Paper No. 10.

John F. Kennedy School of Government, Harvard University. Retrieved on 200825-07. A recent longitudinal Harvard University study has found that stakeholder balanced banks showed four times the growth rate and eight times employment growth when compared to banks that focussed only on shareholders and profit maximization. CSR has also led to increased sales and customer loyalty.

Refer http://www.risc.org.uk/readingroom/csr/csr_mainconcepts.pdf Allen, L., Guo H., Weintrop, J. 2004. The Information Content of Quarterly Earnings in Syndicated Bank Loan Prices. Baruch College Working Paper. Altman, E. 1968. Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. Journal of Finance 23, 589-609

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Aintablian, S., Roberts, G.S. 2000. A Note on Market Response to Loan Announcements in Canada. Journal of Banking and Finance 24, 381-393.

Asmundson, P., Foerster, S.R. 2001. Socially Responsible Investing: Better for Your Soul or Your Bottom Line? Canadian Investment Review 14, 20-34.

Aupperle, K., 1991. The Use of Forced-Choice Survey Procedures in Assessing Corporate Social Orientation. Research in corporate social performance and policy 12, 269-79.

Bansal, P., 2005. Evolving sustainability: a longitudinal study of corporate sustainable development, Strategic Management Journal 26(3), 197-218.

Barber, B., Lyon, R. 1997. Detecting Long Run Stock Returns: The Empirical Power and Specification of Test Statistics. Journal of Financial Economics 43, 341372.

Barnea, A., Rubin, A. 2005. Corporate Social Responsibility as a Conflict Between Owners. Simon Fraser University Working Paper.

Bauer, R., Koedijk, Otten, R. 2005. International Evidence on Ethical Mutual Fund Performance and Investment Style, Journal of Banking and Finance 29, 1751-1767.

Berger, A. N. and Bouwman, C.H. S 2008. Financial Crises and Bank Liquidity Creation, http://ssrn.com/abstract=1231562

Berger, A., Udell, G. 1995. Relationship Lending and Lines of Credit in Small Firm Finance, Journal of Business 68, 351-381.

Bhojraj, S., Sengupta, P. 2003. Effect of Corporate Governance on Bond Ratings and Yields: The Role of Institutional Investors and Outside Directors. Journal of Business 76, 455-475.

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Buysse, K., Verbeke, A. 2003. Proactive environmental strategies: a stakeholder management perspective. Strategic Management Journal 24(5), 453-470. Carroll, A.B., 1991. Corporate Social Performance Measurement: A Commentary on Methods for Evaluating an Elusive Construct. Research in corporate social performance and policy 12, 385-401.

Chen, H., Kacperczyk, M., Ortiz-Molina, H. 2007. Do Non-Financial Stakeholders Affect Agency Costs of Debt? Evidence from Unionized Workers. University of British Columbia Working Paper.

Clarkson, M.B., 1995. A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review 20, 92-117.

DAntonio, L., Johnsen, T., Hutton, R.B. 1997. Expanding Socially Screened Portfolios: An Attribution Analysis of Bond Performance. Journal of Investing 6(4), 79-87. Coleman, A., Esho, N., Sharpe, I. 2006. Does Bank Monitoring Influence Loan Contract Terms? Journal of Financial Services Research 30(2), 177-198. Dennis, S., Mullineaux, D. 2000. Syndicated Loans. Journal of Financial Intermediation 9, 404-426. Nandy, D., Sharpe, I. 2000. The Determinants of Contract Terms in Bank Revolving Credit Agreements. The Journal of Financial and Quantitative Analysis 35(1), 87-110. Dewatripont, M., Jewitt, I., Tirole, J. 1999. The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies. The Review of Economic Studies 66(1), 199-217. Diamond, D.W., 1984. Financial Intermediation and Delegated Monitoring. Review of Economic Studies 51, 393-414.

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ANNEXURE

Dear Sir/ Madam, I ,Shalini Kakkar, a research Scholar, is pursuing M.Phil from Global Open University, Nagaland, as a part of my thesis on the topic Role of Corporate Social Responsibility in Indian Banks, need your opinion for my study. Kindly fill the questionnaire which will be useful for my research. Your responses will be kept confidential and will only be used as a part of my research purpose.

Questionnaire

SECTION A

Age:

20-30 yrs

30 yrs and above

Gender:

Male

Female

Designation:

Q1. Is your bank engaged in CSR activities?

Fully

Partially

Not at all

Q2. Is it reported and published?

Yes

No

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SECTION B Following are the statements relating to certain CSR activities followed in the banks. Kindly give your opinion for the statements by putting a tick mark in the relevant column. Statements Strongly Agree Agree Dont know Strongly Disagree Disagree

Fulfillment

of

responsibilities to consumers Formation of

safe, healthy work environment Contribution to

regional lifestyles Equality opportunities Continuity creation regional culture Balance between and of of

work and personal life Sustainable corporate culture Support for

environmental and social activities of suppliers Resource cycling and reduction waste

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Reduction environmental burdentransportation Prevention

of

and

remediation of soil contamination Reduction of

green house gases that lead to Global Warming Preservation water of

resources

and water quality Reduction environmental burdenproduct of

and services Preservation bio-diversity Quantitative material energy data Compliance Corporate Governance and of

Risk Management

Education society

to

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Management Philosophy Information Disclosure/ Communication

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SECTION-C 1. What do governments require? Do you need to ensure that these requirements are being met? 2. What do consumers and other groups expect of businesses in this situation? Does your work meet their expectations? 3. Where are the opportunities for a single firm or brand to gain advantage over its competitors? Can you identify and harness them? 4. Where is there no likelihood of profit but a great likelihood of harm? Is this impossible to resolve by firms that must make profits? Can your organization contribute to a resolution? 5. Which codes of conduct and other expectations govern the choices of business in this context? 6. What problems can be tackled that will enhance the value, brand, or profits of a specific firm?

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APPENDIX-1 Putting Teeth in Corporate Social Responsibility Corporate social responsibility (CSR) has become a fashionable, if not particularly welldefined, term in recent years. The concept encompasses a broad range of activities that corporations may engage in, with varying degrees of enthusiasm, to demonstrate that they are addressing important human rights, environmental, and labor issues - many of which have been brought to their attention by activist groups. A key component of the general discourse around CSR has been so-called multistakeholder initiatives, which bring together corporations, governments, and nongovernmental organizations to talk about and in some cases develop mechanisms for addressing, particular areas of concern. The era of globalization has been replete with such initiatives intended to promote greater respect by transnational corporations of human rights and environmental principles. Among these are the UNs Global Compact, the Voluntary Principles on Security and Human Rights, the Kimberley Process for monitoring the global diamond trade, and the Extractive Industries Transparency Initiative. These initiatives have represented an effort to retake some of the control over the actions of transnational corporations that globalization has forced states to concede. Indeed, globalization has largely been defined by efforts to reduce state involvement in economies and reduce barriers to entry by corporations. Free-trade agreements, one of the key pillars of globalization architecture, contain provisions designed to limit states abilities to adopt and enforce regulations on corporations for purposes of protecting the environment and public health. The CSR initiatives in a general sense have been useful venues for public debate about these issues. They may also have helped elevate the issues they seek to address to higher levels of awareness among policymakers and corporate leaders than would otherwise have been the case. Despite the existence of such initiatives, however, human rights and environmental problems continue to affect a broad range of corporate operations around the world, particularly in the oil and mining sectors.

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A key problem affecting all of the voluntary CSR initiatives is that they are just that: voluntary, and thus lack any real enforcement mechanism for sanctioning corporations that fail to comply with the principles or standards promoted by the initiatives. The Voluntary Principles have recently faced difficulties arising from the refusal of banks to agree on criteria for expulsion from the process for noncompliance. The lack of enforcement capacity has led some skeptics to argue that these initiatives are nothing more than corporate "greenwash" that enable corporations to argue that they are taking CSR issues seriously but are in reality not fundamentally changing the ways they operate. What can be done to put some teeth into CSR so that it becomes more than just an excuse to create more "talking shops" or glossy reports to be downloaded from a companys website? There are two key areas in which to look for answers to this question. One lies in strengthening governments' abilities and incentives to regulate corporations. Ultimately, governments have a responsibility to hold corporations accountable for operating responsibly. But fulfilling this responsibility is unlikely to happen given the inequitable power structure in the global economy that serves the interests of the rich countries (and the corporations that are headquartered there). Moreover, the skewed power imbalances in developing countries themselves enable the elites to benefit from globalization while leaving everyone else in the dust. Recent efforts to hold corporations legally accountable for human rights violations via lawsuits in U.S. courts are a positive development, but the legal basis on which such cases have been filed may be too limited to have a broad impact on the corporate sector more generally. Efforts to "normative" corporate obligations under international human rights law, such as the recently adopted UN Norms on Transnational Corporations, are also positive. But again they lack a vehicle for enforcement. A second area is perhaps more promising. It lies in identifying what corporations are most interested in. Two items are critical for corporate profitability: Access to capital and access to markets. If ways can be found to link corporate performance on CSR issues to continued

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access to both of these things, real leverage could be established for holding corporations accountable. For capital linkage, the focus should fall on the private banks that finance transnational corporations. They provide the lifeblood to corporations. Respect for human rights and environmental standards could be made a legally-binding part of the loan agreements between the banks and the corporations. In other words, capital will be cut off from a project if serious human rights or environmental violations are found to have occurred. The World Bank has tried this approach with its social and environmental safeguard policies. The problem, however, is that the Bank has only once in its history ended a relationship with a company based on a social or environmental policy violation. The institution has effectively taken its ultimate enforcement mechanismthreat of divestmentoff the table. Similarly, a group of private banks has adopted the Equator Principles, essentially committing to following World Bank standards for projects it lends to. Yet here again, there is no real sanction for violations of these policies. What incentive would these banks have to require compliance with CSR criteria? Clearly, one or more major private banks would have to establish a moral leadership position and reap the benefits that position might produce, such as positive public relations, happier employees, etc. Private banks also often have lower reputational risk tolerance than do large corporations, particularly in the extractive sector. Mining and oil banks are used to "keeping their heads down and letting the bullets fly over the top," as one mining company official once described it to me. Private banks are not. There is empirical evidence that social and environmental irresponsibility is increasingly translating into real financial risk. In this sense, banks will see a growing business case for ensuring real responsibility to protect against risk. As for the other area of linkage, much could be done to deny markets to corporations that violate human rights and the environment. Large institutions, such as public utilities, universities, pension funds, and corporations that consume significant volumes of materials

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or are brand-sensitive could adopt legally binding contracts that discontinue materials or stock purchases from corporations that operate irresponsibly. In this way, such institutions could force corporations to compete with each other to provide the most responsibly produced products. Market-based incentives could be found in a purchasers desire to maintain a clean corporate image and reduce supply-chain risk. Corporations that supply products to these markets must face a real risk of losing key clients if they act irresponsibly. Putting teeth into CSR is a challenge. Incentivizing lenders and purchasers to care enough to recall their capital or cancel contracts if problems arise is a conundrum, but may be becoming easier to crack. Answering this question is about hitting corporations where they livein the worlds of capital and marketsrather than in the comfortable confines of CSR dialogues. In this way, we can bite back some of the ability to hold corporations accountable that globalization has chewed away.

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APPENDIX-2

Corporate Social Responsibility We assist business owners by discussing opportunities and risks in the economic, social and environmental field at an early stage. Our organisation also provides support by stimulating innovations in areas including cleantech, sustainable energy and the environment. We furthermore offer products and services that contribute to the sustainable development of wealth and welfare for our clients and society. These activities make Rabobank one of the top three most sustainable banks worldwide. Vision and Mission

We are committed to conducting business with you in a respectable and transparent manner by providing our sustainable and socially responsible banking services. This commitment is reflected in our core values of respect, integrity, professionalism and sustainability. Products and services

Rabobank is firmly committed to achieving maximum client value, and that commitment has proved to be fully compatible with our commitment to CSR. Dialogue

One of the pillars of Rabobanks issue management policy is the multi-stakeholder dialogue. This entails bringing together relevant stakeholders who are involved with one or more CSR issues within a sector or production chain. The related objective is to develop mutual trust and to provide a platform for exchanging knowledge.

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Employees and CSR

Involved employees are vital to the success of Rabobank Group. Employees that are committed to the shared ambitions, values and standards of the Group can really make the difference when it comes to realizing our business objectives.

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APPENDIX-3 The Karmayog Corporate Social Responsibility Study and Ratings of Indian Banks was undertaken to explore and understand the role that corporates are playing...in finding meaningful solutions to the problems facing India today...Karmayog undertook...rating to understand the CSR activities of all banks on an equal level, thus showing up banks doing no CSR, as well as showcasing banks doing good work... Study Finds that Largest Indian Banks Need to Improve CSR Activities and Reporting Robert Kropp, SocialFunds.com 13 Apr 2009

UN engages banks to light up rural India; Solar loans, energy access transform life for poor UNEP 29 Apr 2007

Life for an estimated 100,000 people in poverty-stricken rural India has been improved dramatically by several hours of reliable solar-powered lighting every night, made available by a UN-led pilot project to facilitate household financing for solar home systems...[Core funding is provided by] UN Foundation...[&] Shell Foundation...Two of India's largest financial institutions became the project's initial partners: Canara Bank and Syndicate Bank. Two more banks, the Bank of Maharashtra and Sewa Bank, were added as partners this year...Encouragingly, Indian banks not included in the initial partnership have launched competing solar loan products and competition is heating up.

Lupin Labs Bags Corporate Social Responsibility Award [India] Hindu Business Line 20 Dec 2003 Lupin Laboratories Ltd has bagged the Businessworld-FICCI-SEDF Corporate Social Responsibility (CSR) Award 2003 for its contribution in the field of community development. The company has taken significant initiatives towards empowering women in Bharatpur district of Rajasthan by encouraging self-help groups. Lupin has also undertaken various projects to upgrade water, agriculture, income generating programmes

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and health. [other awards to Canara Bank, Gujarat Ambuja Cements, Indal (part of Aditya Birla Group), ITC Ltd, Wipro Ltd]

INDIA: Banks, UNEP Launch Solar Power Initiative UN Wire 05 Mar 2003 The U.N. Environment Program and two of India's largest banks [Syndicate Bank, Canara Bank] yesterday launched a $7.6 million solar power initiative aimed at helping 18,000 households in southern India conserve energy and emit fewer pollutants...UNEP backed the project along with the United Nations Foundation and the Shell Foundation.

APPENDIX-4 February 3rd, 2009 Trust and Corporate Social responsibility: Lessons from India Ashwani Singla

Chief Executive Officer, Genesis Public Relations Pvt. Ltd. & Prema Sagar Founder & Principal, Genesis Public Relations Pvt. Ltd. On action alone be thy interest, Never on its fruits. Let not the fruits of action be thy motive, Nor be thy attachment to inaction. Bhagavad-Gita, Chapter

Spirituality and Corporate Social Responsibility have had a deep-rooted connection in India. A phenomenon that has preceded the coining of the term CSR, the link between the karma as espoused by sacred Indian texts and initiatives anchoring corporates as responsible citizens has been amply evident in India since the early days. This is widely divergent from the perspective of corporate social responsibility in Western economies as reflected in the observation by Arthur Page, vice president of public relations at AT&T for around 20 years and former advisor to the US President: all business in a democratic country begins with public permission and exists by public approval .

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Viewed from this perspective, public relations professionals are the custodians of trust for the corporate world. While the global spotlight today focuses on debates on corporate trust, India can proudly flaunt a head start in this arena. Yet, before we present Indias case, lets briefly scan some recent happenings, particularly in the US, that led to an erosion of trust in Corporate Inc. worldwide.

Erosion of Trust in Corporate Inc.

The turn of the millennium has witnessed mammoth bankruptcies, accounting scandals and obstruction of justice allegations. The consequent tarnishing of gilt edged names like Enron, WorldCom, Xerox, Arthur Andersen, Kodak, to name a few, has had widespread ripple effects in the corporate world. Yet news continues to pour in KPMG, the big accounting firm, agreed to pay $200 million in suits arising from audits of Rite Aid and Oxford Health Bristol Myers, the pharmaceutical giant, inflated sales by $2.75 billion in 1999-2002. The National Association of Securities Dealers (NASD) has charged an executive of CSFB with fraudulent allotment of hot IPOs to 300 of his corporate executive friends, to persuade them to prefer CSFB for their investment banking business. The new management of Tyco, whose CEO and CFO are under criminal prosecution for frauds totalling $600 million, is discovering more new scandals. Health South has been charged with an accounting fraud of $1.4 billion by inflating insurance claims. There are a number of suits, in what could turn out to be the biggest case, against Citigroup, J P Morgan and other investment banks for helping Enron and other banks to commit fraud, and for rigging IPOs to defraud the investing public. Needless to say, this is hardly an exhaustive list.

The repercussions have been immense According to a survey by BusinessWeek, 92% of respondents have only some or hardly any confidence left that the market treats individual investors fairly. Some 93% have only some or hardly any confidence in those who run big banks. About 95% feel the same way about big auditing banks, such as Arthur Andersen.

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Some 82% are either not too confident or not at all confident that corporations accurately report how much money they make. And few of the respondents really believe that anyone can or will do much about all this. For instance, 94% have only some or hardly any confidence that Congress can write effective rules governing corporate financial practices. Some 93% have the same view of the chances that federal regulatory agencies can do the job. And 60% strongly disagree that corporations can successfully reform themselves. According to another survey by Business for Social Responsibility, a global organization, 90 per cent of American respondents want banks to look beyond the bottomline. BSR also found that nearly 50 per cent form an impression of a company based on its behavior and 39 per cent react negatively to a company that is perceived not to be socially responsible. These are challenging times for banks, pension funds and individual investors. The Teacher Retirement System of Texas and the Texas Employee Retirement System is the last fund that you would expect to be impacted by corporate scandal. But look again. With approximately $100 billion to protect, they have to make wise investment choices for their members. Both funds invested in Enron, and both talk about their losses on their respective websites. In the communications business, we confront the challenge of this changing environment every day. We see stakeholders hold banks under the magnifying glass, checking accountability, monitoring performance and assessing a companys impact in a communi ty or on the environment. We have seen and continue to see how this intense scrutiny has affected businesses.

India too has seen some repercussions of the global mood

There has been a general mood breeding a lack of trust in regulators following recent scams unearthed in the Indian stock markets. The brooding has had its fallout on unsuspecting banks, as ICICI Bank, one of the countrys largest banks, would confirm. A short message service that the bank was on the verge of bankruptcy started the run, gathered momentum as messages were flashed across cell phone networks, ICICI Bank branches across many cities witnessed the unedifying

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spectacle of queues of people waiting to withdraw their money as fast as they could. The Reserve Bank of India had to step in to calm things down.

The importance of trust Research by Burson Marsteller, called Building CEO Capital reveals dramatic findings. After speaking with more than 1,100 business influentials CEOs and other senior executives, financial analysts, institutional investors, the business media and government officials in the United States the research infers that the CEOs reputation is a key factor in a companys reputation. In fact, the research data reveals that: CEO reputation accounts for a staggering 48 per cent of a companys reputation. Banks whose CEOs were rated most admired achieved a 13 per cent compound annual shareholder return over a three-year period. Banks with CEOs who were rated less favorably delivered a negative return. Eighty-eight per cent of respondents said that the CEOs reputation would influence whether they would recommend a company as a good place to work. Ninety-four per cent would believe the company if under media pressure. Ninetytwo per cent would maintain confidence in the company when share price is lagging. The growing importance of trust is also embedded in a number of other developments: The rise in the number, influence and sophistication of non-governmental organisations that monitor, track and inspect global corporate players. Less than 30 years ago, there were 1,400 NGOs. In 1995, there were nearly 30,000. Today that number has grown 10 fold. An increase in shareholder activism. Of the more than 700 shareholder resolutions filed in the US in 2002, more than a third of them were based on social issues. Greater disclosure requirements of social and environmental performance as part of their new economic regulations by Governments, particularly in Europe.

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Just three years ago, the concept of triple bottom line reporting that means assessing and providing an accounting of a companys social, environmental and economic impact and performance was embraced by only an enlightened few. Today, such reporting is embraced by the majority to prove they are acting responsibly.

The recognition of the importance of Trust is well entrenched in India Respect is, in some ways, an intrinsic part of Indian culture. The Indian ritual of touching the feet of elders is a good example of how respect manifests itself in everyday life. This transcends into the corporate world. For decades now, since Independence, corporate majors such as the Tata and Birla group banks have led the way in making corporate social responsibility an intrinsic part of their business plans. These banks have been intensely involved with social development initiatives in the communities surrounding their facilities. Jamshedpur, one of the prominent cities in the northeastern state of Bihar in India is also known as Tata Nagar and stands out at a beacon for other banks to follow. Respect is a much sought after tag in the Indian corporate world. This is one of the reasons for the immense popularity of The Most Respected Banks of India survey, initiated by one of Indias premier business magazines, BusinessWorld in 1983, long before skeletons began toppling out of the corporate closets around the globe. In fact, the magazine admitted in a cover feature following its first survey that the overwhelming reader response to its first ever ranking of corporate reputations indicated that there is a great deal of interest within the management community in the subject of corporate reputations and that this interest was more than academic. Respect, as viewed by the survey was an aggregation of two broad parts of a companys deliverables: responsibility). The parameters for corporate respect in this survey are wide ranging: Overall quality, top management leadership, depth of talent, belief in transparency, ethics, social responsiveness, and environmental consciousness. quantitative (like profitability) and qualitative (like community

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Criteria for ranking Indias most respected banks Source: Businessworld, January 2003 [Indias most respected banks] What the survey clearly reveals is that impressive financials are not enough to earn respectYou were respected not because you were big and powerful, but because you were transparent, your stakeholders trusted your policies, your HR guidelines were fair, you were ethical, and you contributed to society. Transparency and ethics were the most important. Respect is the first thing we look for when doing anything, says N.R. Narayana Murthy, Chairman Infosys Technologies, the company that was crowned the Most Respected Company in the survey this year.

Top Ten Most Respected Organizations in India, 2003 in terms of CSR.

No.1 Infosys Technologies

No.2 Hindustan Lever

No.3 Reliance Industries

No.4 Wipro

No.5 ICICI Bank

No.6 Gujarat Co-operative Milk Marketing Federation No.7 Dr. Reddys Laboratories

No.8 HDFC

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No.9 ITC

No.10 Hero Honda Source: Businessworld, January 2003 [Indias most respected organisations] As per Narayanmurthy, At the end, respect comes to people who do desirable things and who can be trusted. When you make a statement, people should say, we believe. It is no surprise that Narayanmurthy holds J.R.D. Tata in great esteem as an icon. The first name that comes to any Indian on the subject of CSR is that of the Tata Group. There has been a long history of CSR in India and the Tatas have been the role models on this path. Explains the chairman of the Tata Group, Ratan N. Tata, We do not do it for propaganda. We do not do it for publicity. We do it for the satisfaction of having really achieved something worthwhile. The Tata Business Excellence Model integrates social responsibility into the framework of corporate management wherein social responsibility is encapsulated as Key Business Process. In fact all social service departments in Tata banks have annual programmes and budgets and all this is aligned to the MDs Balanced Score Card. Corporate Social Responsibility programmes at the Tata group of banks extend across a wide spectrum including rural development, community development and social welfare, family initiatives, tribal development and water management. About 7000 villages around Jamshedpur and Orissa benefit from development programmes run by the Tata Steel Rural Development Society (TSRDS). programmes of TSRDS cover issues like education, irrigation, a forestation, adult literacy, vocational training, handicrafts and rehabilitation of the handicapped persons. The Community Development and Social Welfare Department (CDSW) at Tata steel carries out medical and health programmes, blood donation drives, mass screening of Tuberculosis patients immunization camps and drug de-addiction. In 1999, Tata Steel embarked on an AIDS awareness programme, which has now become an integral part of all training programmes. Routine activities like immunization programmes, sterilization operations and mother and child

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health care programmes are conducted through 9 family welfare centres, 9 child clinics and 6 community-based clinics. In fact, Tata Steels Centre for Family Initiatives (CFI) was successful in influencing 59 per cent of Jamshedpurs eligible couples practicing family planning, compared to the national figure of 35 per cent. A commitment to the welfare of the community has long been central to the value system of banks in the Tata Group. To build upon this heritage the Tata Council for Community Initiatives (TCCI) has created the Tata Guidelines on Community Development, an effort of over three years from the field evolved into a framework of best practices. The Birla group of banks are also among the pioneers in the field of corporate social responsibility in India. As part of the Aditya Vikram Birla Groups Social Reach, the Birla group runs as many as 15 hospitals in India; includes Adult education and schools conducting as many as 78 schools all over India; rehabilitates Handicapped persons having touched more than 5000 physically challenged individuals. More than 1,00,000 patients have been examined under the Groups medical programmes. Over 15,000 children along with 2000 pregnant women have been immunized, over 500 cataract patients operated, 2000 TB patients provided medical care, 100 leprosy-afflicted attended to, free of cost. It also provides Vocational Training, having provided training to over 3000 women and having distributed over 1400 tool kits in a variety of areas like electrical, auto repair, electronic equipment maintenance and repair and tailoring. It has adopted several villages under its Village Infrastructure Development programme and has provided extensive training to over 10,000 villagers in its Carpet Weaving Center. Among corporates who have displayed deep commitment to Corporate Social responsibility over long years is Mahindra & Mahindra. The late Mr. K. C. Mahindra for promoting education among Indians at all levels established the K. C. Mahindra Education Trust in 1953. Every year the Trust offers up to 30-40 interest-free loan scholarships to post-graduate students going abroad for higher studies. The Mahindra Search for Talent Scholarships is a scheme established in 34 schools in India to enthuse and reward students who have achieved excellence in their academic pursuits. The Mahindra All India Talent Scholarships are awarded every year from all over India to over 300 students from lower income group families with good scholastic record pursuing job-oriented diploma courses in various polytechnics.

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Similar commitment to CSR has been displayed by several corporates in India. The list, which at best can be far from complete, includes Arvind Mills, Escorts, Dabur, Bajaj, Godrej, Hero Honda, DCM Sriram, Ashok Leyland, Ballarpur Industries, Eicher, Kinetic Group, Kirloskar, Infosys, Reliance, Ranbaxy, Wipro, each of which has been deeply committed to their communities engaging in programmes encompassing education, health, education, integrated rural development. Beyond the private sector, corporate players in Indias public sector too have been actively involved in corporate social responsibility initiatives. Most public sector units in the heavy engineering industry have not only set up a township around the plant, but also established a school, a hospital and several other civic facilities for its employees and those that live in that area. Private sector banks have been encouraged to undertake rural development programmes down the years through fiscal incentives by the government. For instance, special benefits are offered in the industrial policy to banks that set up industries in backward areas and tax incentives are also offered to banks that set up water purification projects. In India, it has also been noticed that when it comes to individual CSR activities, the anonymous donor mentality prevails. That most people tend to keep a low profile was confirmed by The Economic Times, a leading business daily in India. It conducted a straw poll and talked to several professionals involved in the field and NGO circuit to get an idea about the leading lights. Of course, with the intense spotlight on the subject, the interest in corporate social responsibility is spreading in India as well. The Corporate Social Responsibility Survey 2002India, jointly conducted by the United Nations Development Programme, British Council, Confederation of Indian Industry and PricewaterhouseCoopers, covering 19 industry sectors reveals that this interest is growing as more and more banks in India are keen to project themselves as good corporate citizens. This was the most important factor driving CSR in India, according to the survey. Good corporate citizenship and CSR initiatives are inextricably linked with improved brand reputation, which is one of the most important drivers of CSR identified by the respondent banks. The other key drivers of Corporate Social Responsibility in India were diverse ranging from stated philosophy of

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founding fathers to improving relationship with local communities to enhanced shareholder value.

Drivers of CSR Source: Corporate Social Responsibility Survey 2002 India (United Nations Development Programme, British Council, CII, PriceWaterHouseCoopers As part of the survey, over 100 companiesranging from large to mid-sized corporationsresponded to questionnaires sent to around companies during SeptemberOctober 2002. Besides, a group of researchers conducted an in-depth study of CSR programmes in top business houses. The respondents unanimously acknowledged that social responsibility was no longer an exclusive domain of the government and CSR is much more than passive philanthropy. India has a strong tradition of philanthrophy, states the foreword to the survey, It is encouraging to note that many are beginning to make a shift from a tunnel vision on corporate social responsibility to an integrated model that mainstreams through business vision and processes. In fact the most striking feature of the survey was the overriding response that passive philanthropy alone no longer constitutes corporate social responsibility. The Survey broadly categorises the main types of CSR activities undertaken by Indian corporates as under:

Areas of CSR addressed in Corporate Policies

Source:

Corporate

Social

Responsibility

Survey

2002

India

(United Nations Development Programme, British Council, CII, PriceWaterHouseCoopers

The Public Relations link Interestingly, the website Indian NGOs.com, a site intended to be a repository of information on the developmental sector, conducted personal interviews on social

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responsibility with 196 Indian corporates, and supplemented this with secondary research on the CSR policies of all the Fortune 500 banks. According to the results of the study, in 58 per cent of the corporates, the public relations department shoulders the responsibility for CSR initiatives.

Departments handling CSR

PR 58%

Foundation staff 12%

CSR Dept 5%

Other Depts handling CSR: HR, Admin 25% The fact that this was not a recent phenomena was evident in the fact that the more than a third of these departments handling had been in existence for over 15 years and over 60 per cent had been in existence for over 5 years. This link is a reflection of the role that public relations play in generating trust through corporate social responsibility. Public relations, in fact, is the social face of an organization driving stakeholder relationships. This connect has only reinforced this role, often lost in the myopic vision of media relations, as banks are focusing on communicating their CSR initiatives through multiple platforms, transforming their websites, issuing reports and signing up to speak on conference panels. As professionals who have been avid observers of corporate social responsibility initiatives in India and intensely involved as they link in with public relations, it is extremely important to point out the need to take into account the sensitivities and sensibilities of the Indian populace while undertaking such programmes. The importance accorded to respect for elders, relationships and family values are the pillars upholding the symbiotic relationship between the community and businesses in India. The deeply engrained belief in karma as espoused by the Bhagwadgita extends into the role of business in this society, breaking across the barriers of culture, religion and

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language. Well-advised multinationals operating on Indian soil like Ford India and Cargill has shown deep respect for local sensitivities and pride. Navigating this sometime difficult environment presents businesses with new challenges yet also offers new opportunities. But sound practices and relationships with stakeholders better prepare us to deal with unique issues thrown up by distinct regions. It is however important to ensure that at every level, employees involved in CSR activities understand their role in making certain the company follows through on its commitments. This is where public relations come in. Formally or informally, it has been bridging the gap between trust and CSR initiatives in India, making the Indian experience a success. Currently published in the US-based Journal of Communication Management in 2003

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