Corporate Social responsibility is best defined by the World Business Council as “The continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families as well as of the local community and society at large”.
Banking is a specialized business. Banks have large number of creditors and failure of one bank can lead to the failure of many other banks as the customers lose faith that can cripple the entire economy of a nation. The recent global financial meltdown has created a negative and gloomy sentiment in all the stakeholders in the entire banking industry, including in India since financial markets in India even if loosely, but are connected to global financial markets. However, prior to this meltdown, customers, and other stakeholders held positive expectations about their banks performance.
If banks can leverage this social capital in times of distress, it can help to negate or reduce the potential negative influence on their performance. CSR orientation of banks can be a useful tool for them to tide over such crises in future, if banks maintain their relationships with stakeholders in making their businesses more sustainability. CSR, among other things, is a key stakeholder relationship building activity. It was also found that the CSR brand does reap more relationship benefits from its social initiatives than do its competitors indicating the competitive positioning and relationship benefits of the brands associated with CSR.
In the Indian context too, previous studies have shown that Indian banks concentrate its CSR activities more on areas such as, education, balanced growth, health, and environmental marketing, and incorporate customer satisfaction as a CSR activity. Given this evidence, can we expect that banks in India consider CSR orientation and stakeholder relationship marketing orientation as flip sides of the same coin.
In 2011, a debate was triggered on increasing the social responsibility of India’s corporate, as the government of India was mulling over the idea of a mandatory spend of 2 % of profits on social responsibility programs by all Indian companies. With the implementation of this step, the collective spending on CSR initiatives would be approximately $ 2 billion a year (almost Rs 80,000 million) (Source: www.banknetindia.com/ banking). Even if CSR spends are not mandated by the government, even then it has initiated an awareness among Indian corporate to spend more on building healthy social relationships with their customers and other stakeholder.
ROLE OF STATE BANK OF INDIA IN CSR ACTIVITIES
Indian Banks were not to be left behind. In August 2011, the largest bank in India, State Bank of India (government of India is a majority stakeholder) announced that it would spend $ 2 million (almost Rs 800 million) on CSR initiatives, such as by donating fans to schools in the vicinity of all its 13,000 bank branches. (Source: www.indiacsr.in). This announcement by the largest bank in India, signals the increasing pace with which Indian banks may try to catch up with their peers using CSR initiatives in building relationships with its stakeholders.
ROLE OF SBI IN CSR
State Bank of India is found to be adopting an integrated approach of combining CSR with the ultimate customer satisfaction voluntarily. In recent years an attempt has been initiated to ensure socially responsible behavior of banking sector in more systematic manner. RBI has also insisted upon taking measures for sustainable development of economy through realizing the dire necessity of CSR.
Chart 1: Core thrust areas for reported CSR activities encapsulated by SBI
FROM INCEPTION TO TILL DATE
The SBI Group is vigorously promoting business activities in harmony with corporate social responsibility (CSR) with our password to success, "integrity is the basis of profit.”
2001-2002 – SBI...