Corporate Social Responsibility in Banks

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  • Topic: Social responsibility, Corporate social responsibility, Socially responsible investing
  • Pages : 10 (2899 words )
  • Download(s) : 380
  • Published : February 24, 2010
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Corporate Social Responsibility in Banks

S.Kavitha[1]

Abstract

Corporate social responsibility stands for business contribution to sustainable development and covers company’s active participation in different fields, human rights, human resources, relations with clients, suppliers, and other stake holders, corporate governance, environment and contribution to community and society. The social responsible attitude is integral part of the identity of financial institutions like banks, and it is one of their distinctive features. The Reserve Bank of India has asked the banks to pay special attention towards integration of social and environmental concerns in their business operations. Many of the newly formed private and foreign banks are aware of the importance of such a step and therefore are having an active CSR department in their banks. This paper is an attempt to explain the concept of corporate social responsibility and the different CSR practices followed by banks in India.

Key Words: CSR – Corporate Social Responsibility, Friedman’s View, Carroll’s View, Discretionary Responsibility

Corporate Social Responsibility in Banks

S.Kavitha[2]

Introduction

Corporate social responsibility stands for business contribution to sustainable development and covers company’s active participation in different fields, human rights, human resources, relations with clients, suppliers, and other stake holders, corporate governance, environment and contribution to community and society. The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making profit. Social responsibility is the way of life for most business organizations. It enables all such activities ranging from providing safe products and service to giving a portion of company’s profit to welfare organization. The social responsible attitude is integral part of the identity of financial institutions like banks, and it is one of their distinctive features. The Reserve Bank of India has asked the banks to pay special attention towards integration of social and environmental concerns in their business operations. Many of the newly formed private and foreign banks are aware of the importance of such a step and therefore are having an active CSR department in their banks.

Concept of Social Responsibility:

Corporate social responsibility is the sense of obligation on the part of companies to build social criteria in to their strategic decision-making. The concept implies that when companies evaluate decision from an critical perspective there should be presumption in favor of adopting course of action that enhance the welfare of society at large. The goals selected might be quite specific. - To enhance the welfare of communities in which company is based. - To improve the environment

- To empower employees to give them a sense of self worth.

Different views on social responsibility

Friedman’s Traditional View of Business Responsibility
Urging a return to a laissez-faire worldwide economy with a minimum of government regulations, Friedman argues against the concept of social responsibility.
Adam Smith and Milton Friedman, economists, according to them the only responsibility of business is to perform its economic functions efficiently and provide goods and services for society and earn maximum profits. By doing so business performs its economic functions and leaves the social functions to other institutions of society, such as the government. A businessperson who acts responsibly by cutting the price of the firm’s product to prevent inflation or by making expenditures to reduce pollution, or by hiring the hard-core unemployed, according to Friedman, is spending the shareholder’s money for general interest. Even if businessperson has shareholder permission or encouragement to do so, he or she is still acting from motives other than economic, in the...
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