A Comparative Study on the CSR Activities of Public and Private Sector Commercial s Nabasmita Bordoloi 1, Dr. Kalyan Mukherjee 2 1 Research Scholar, Department of Commerce, Gauhati University and Assistant Professor, Department of Commerce & Economics, University of Science & Technology, Meghalaya 2 Ph. D Supervisor, Department of Commerce, Gauhati University and Associate Professor, Department of Commerce, Hojai College, Assam ABSTRACT : Corporation is an integral part of the society. Its development and prosperity depends on the various stakeholders of the society. The failure or success is totally depends on the society. These corporate houses receive all the required inputs from the society. Their products or services are too consumed by the society. This creates an ample scope for the corporate houses to think and act for the betterment and sustenance of the society and its stakeholders. These Responsibility of Corporate houses can be termed as Corporate Social Responsibility. CSR in India has been continuously influenced by the different national and international level guidelines and notification issued by different authorities time to time. However, the guidelines issued were voluntary in nature. It was not compulsion for corporate house to practice CSR. So, whatever they were practicing, were voluntary act of the corporate houses. However, the Companies Act, 2013 has brought a drastic change in the CSR practices in India. The provision of the said Act made CSR activities compulsory for the certain categories of companies in India. Through the present study researchers have drawn a comparison of CSR practices of select corporate public sector commercial banks and private sector commercial banks. Keywords: CSR,Companies Act,, Guidelines, Society,2013. I. Introduction: Corporate social responsibility (CSR) simply refers the responsibility of corporate houses towards the society. The development and prosperity of a Corporate houses is very much depend on the society. The existence of corporate houses is possible only because of other part of the society i.e. the various stakeholders of the corporate houses. These stakeholders are directly and indirectly contribute a lot for the sustenance of the corporate houses. The corporate houses should also responsible for the betterment of the society [1]. These responsibilities of corporate houses can be regarded as corporate social Responsibility. www.ijirssc.in Page 84
India is a second most populous country in the world [2]. India s 22% of population, that is, 270 million Indians are staying below poverty line [3]. The government of India has to incur huge amount government investment on the various welfare activities for the people of the society. It has seen that the government contribution is not adequate to work out the problems of the poor people of the society. As a result, the government of India made CSR compulsion for certain category of corporate houses [4]. Importance of the Study: CSR is not a new concept to India as well as to the world. Many corporate houses like ONGC, OIL, TATA, ITC etc has also been practicing CSR activities in the different names like sustainable development, corporate responsiveness, carbon emission, green business etc from a long periods. ing and Financial institution are not exceptional in this regard. However, the banking and financial institutions are not directly involved in creation of any social cost like- water pollution, air pollution,global warming etc, but these institutions are also indirectly involved in creating of social cost by providing finance and supporting various projects. Various global and National regulatory body issues various guidelines for the corporate houses regarding their CSR activities. However, these guidelines and provisions were not compulsion for the Indian Companies. But introduction of companies Act 2013 brought severe changes to certain categories of Indian companies towards their social activities. It has seen that, the private sector corporate houses are also very much conscious regarding their CSR activities. In this study the researcher has tried to focus the CSR contribution of both public and private sector corporate houses. Review of literature: Singh, N., Srivastav, R., & Rastogi, R. (2013),[5] in their research paper entitled CSR Practices and CSR Reporting in Indian ing Sector published in International Journal of Scientific and Research Publication have tried to focus on the major areas of CSR initiatives of the Indian s. The Researchers found that most of the banks are still not disclosing the amount that has spent on their respective CSR initiatives. www.ijirssc.in Page 85
Corporate Social Responsibility Practices of Commercial s in Bangladesh: A Case Study on Southeast Ltd. Study undertaken by Md. Ahmed, K. (2013)[6] has focused on the various CSR practices and the areas of CSR undertaken by the select bank. He has found that the select bank follows transparent business practices. Their business practices are based on ethical values, respect for people, communities and the environment, and compliances with legal and regulatory requirement. The researcher has also found that the select bank has spends 2% of their net profit after tax in the year 2012. II. Objectives of the Study: The study is carried out with an objective to compare the CSR activities of public sector commercial banks with private sector commercial banks. III. Database and Methodology: The present study is both analytical and descriptive in nature. The sample units are selected on the basis of judgmental sampling. There are 89 scheduled commercial banks operating in India as on 31 st March 2013 (RBI, 2013). On 25 th September, 2013 Bharatiya Mahila got the banking license from RBI with which total banks increase to 90. Out of 90 banks 27 (including Bhartiya Mahila and SBI associates) are public sector banks, 20 domestic private sector and 43 are foreign private sector banks. For the purpose of this study, only public sector and domestic private sector commercials banks have been considered means 27+20= 47 are the size of the universe. Sample size of the study would constitute 24 banks, 50% from each sector, i.e. 14 banks from public sector and 10 banks from domestic private sector banks. s are selected on the basis of their ranking in relation to their profits of average six years i.e. 2007 to 2013. The selected public sector commercial banks are: State of India, Punjab National, of Baroda, Canara, of India, Union of India, Indian, IDBI, Allahabad, Corporation, Syndicate, Oriental of Commerce, Andhra. Indian Overseas. The selected private sector commercial banks are ICICI, HDFC, Axis, Kotak Mahindra, Yes, Jammu and Kashmir, Federal, IndusInd, Karur Vysya, ING Vysya. www.ijirssc.in Page 86
Private Sector Commercial s Public Sector Commercial banks International Journal of Interdisciplinary Research in Science Society and Culture(IJIRSSC) The data that are required for the secondary sources only like Annual Report of both selected public sector and Domestic Private Sector commercial banks, websites of the select banks, articles published in the journals and newspapers and PhD theses etc. The data that has collected from secondary sources are analysed by using various mathematical and statistical tool. And interpretation is done accordingly. IV. Result and Discussion: Table 1: Gap between the Actual CSR spending and potential CSR spending of the commercial banks during the financial year 2012-13, 2013-14 and 2014-15 Sector s Gap between the actual spending and potential spending in the year 2012-13 (Rs Crores) Gap between the actual spending and potential spending in the year 2013-14 (Rs Crores) Gap between the actual spending and potential spending 2014-15 (Rs Crores) SBI -71.25-78.25-128.89 PNB -84.906-90.833-82.92 BOB -75.06-84.54-75.7 Canara -57.57-56.57-26.894 BOI -45.05-44.94-42.52 UBI -38.39-36.4488-24.36 Indian - -31.19-28.73 IDBI -31.31-32.37-7.28 Allahabad - -29.5332-3.294 Corporation bank -25.13-27.32-17.19 Syndicate - - -31.38 OBC -21.28-18.9 - Andhra - -23.6-19.47 IOB - - -14.54 ICICI -12.28-35.05-8 HDFC -41.27-35.09-17.26 Axis -25.21-32.94 18.96 Kotak Mahindra -12.34-18.13-14.36 Yes -8.05-7.63-10.33 J & K - - -4.14 Federal bank - - -9.09 IndusInd bank -2.4-3.58-4.27 KarurVysya -8.0807-9.1475-8.74 ING Vysya - -6.9 - Source: Self computed from the Annual Reports (2012-13 to 2014-15) of the select commercial banks. www.ijirssc.in Page 87
The Table 1 shows the gap between actual CSR spending and potential CSR spending of the commercial banks during the financial years 2012-13, 2013-14 and 2014-15. The table reflects the gap between actual and potential CSR spending for only 16 and 20 commercial banks in the financial year 2012-13 and 2013-14 respectively. Almost all the commercial banks except Oriental of Commerce from public sector commercial bank and ING Vysysa bank s gap between actual and potential CSR could not be ascertain due non-availability of data in their respective Annual reports. The Table 1 also reveals that during the financial year 2012-13 and 2013-14, none of the banks invested more amount than their potential CSR investment and in the financial year 2014-15, only Axis bank invested more amount than its potential CSR investment. The above stated table also shows that the gap between actual CSR spending and potential CSR spending of select private sector commercial banks are lesser than the select public sector commercial banks during the financial year 2012-13, 2013-14, and 2014-15. Through this, it can be inferred that the private sector commercial banks are more conscious on CSR activities than the public sector commercial banks before and after the compulsion of CSR as per the provisions of the Companies Act, 2013. www.ijirssc.in Page 88
Table 2: Percentage of previous year s Net Profit after tax spent in current year by select public sector commercial bank during the financial years 2007-08 to 2014-15 Name of the YEARS bank 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 SBI 0.18 0.13 0.22 0.27 0.86 1.05 1.06 1.06 PNB --- --- 0.14 0.013 --- 0.07 0.06 0.11 BOB --- ---- --- ---- --- 0.14 0.34 0.39 Canara --- --- --- --- --- 0.34 1.46 1.27 BOI --- --- --- --- --- 0.04 0.28 0.43 Union of India --- --- --- 0.085 0.26 0.069 0.82 0.78 Indian --- --- --- --- --- --- 0.15 0.10 IDBI --- --- --- --- --- 0.005 0.65 2.35 Allahabad --- --- --- --- --- --- 0.025 0.73 Corporation --- --- --- --- --- 0.14 0.12 1.10 Syndicate ---- --- --- --- --- --- --- 0.13 OBC --- --- --- --- --- 0.34 0.57 Andhra --- --- --- --- --- --- 0.19 0.24 IOB --- --- --- --- --- --- --- 0.04 Sources: computed from Annual Reports of select public commercial banks of select financial years The above Table 2 reveals that percentage of previous year s net profit spent in the current year by the 14 selected public sector commercial banks from the financial year 2007-08 to 2013-14. Out of 14 public sector commercial banks, 2 banks i.e. Syndicate bank and Indian overseas bank do not disclose their percentage of previous year s net profit in the current financial year in the Annual Reports of the bank during the periods. SBI is only the public sector commercial bank which discloses its percentage of previous year s net profit in the current from the first year i.e. 2007-08 of the study periods of the study. Punjab National bank discloses its percentage of Previous Year s net profit in current year from the financial year 2009-10, whereas Union of India discloses from the financial year 2010-11. Indian bank, Allahabad bank and Andhra disclose their percentage of previous Year s net profit after tax only in the last year of the www.ijirssc.in Page 89
study periods i.e. 2013-14. The rest of the Commercial banks i.e. Of Baroda, Canara, Of India, IDBI, Corporation and Oriental of Commerce disclose their percentage of previous year s net profit after tax spent in current year from the financial year 2012-13. The highest percentage of previous year s net profit spent in 2012-13 was shown by SBI and followed by Canara, Oriental Of Commerce, Of Baroda, Corporation, Punjab National, Union of India and IDBI bank. And the highest percentage of previous year s net profit spent in 2013-14 was by Canara followed by SBI, Union Of India, IDBI, Oriental Of Commerce, Of Baroda, Of India, Andhra, Indian, Corporation, Punjab National and Allahabad. Table 3: Percentage of previous year s Net Profit after tax investment in current year by the select private sector commercial banks from the financial year 2007-08 to 2014-15 Name of the bank Years 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 ICICI 0.34 0.72 0.41 0.15 0.47 1.80 2.02 1.59 HDFC --- --- --- --- -- 0.75 1.05 1.40 Axis 0.37 0.54 0.43 0.32 0.56 0.89 1.01 1.98 Kotak Mahindra --- --- --- --- --- 0.38 0.27 0.80 Yes --- --- --- --- --- 0.67 0.95 0.97 J & K --- --- --- --- --- --- --- 1.36 Federal --- --- --- --- --- --- --- 0.87 IndusInd --- --- --- --- --- 1.14 1.20 1.25 Karur Vysya --- --- --- --- 0.25 0.056 0.12 0.27 ING Vysya --- --- --- --- --- --- 0.38 --- Sources: computed from Annual Reports of select private sector commercial banks of select financial years. The above table reveals the percentage of previous year s Net Profit after tax spent in current year by the 10 selected private sector commercial banks from the financial year 2007-08 to 2014-15. Out of 10 private sector commercial banks, 2 commercial banks i.e. ICICI and Axis disclose their percentage of previous Year s net profit after tax spent in current year from the www.ijirssc.in Page 90
first year of the study periods (2007-08). And two commercial banks, i.e. Jammu & Kashmir and Federal bank don t disclose their percentage of previous year s net profit after tax spent in current year up to 2013-14 and they have disclosed only from the financial year 2014-15. Karur Vysya bank has disclosed its percentage of previous year s Net Profit after tax spent in current year from the financial year 2011-12 and ING Vysya bank has disclosed percentage of previous year s Net Profit after tax spent in current year only in the financial year 2013-14 and bank has not disclosed its Annual Report during the financial year 2014-15 as the bank has taken over by Kotak Mahindra. ICICIC bank has spent the highest percentage of previous year s net profit in current year s CSR continuously in 2012-13 and 2013-14. But in the financial year 2014-15, Axis bank has contributed highest percentage of previous year s Net Profit after tax in current year. The percentage of CSR spending of the private sector commercial banks from the financial year 2007-08 to 2014-15 can be easily understood with the help of the following diagram. Total Amount spending on CSR activities by both public sector commercial banks from the financial year 2007-08 to 2014-15 Table 4: Total Amount spending on CSR activities by both public sector commercial banks from the financial year 2007-08 to 2014-15. Amount spend on CSR during the financial year (Rs. Crores) Commercial s 2007-2008- 2009-2011- 2010-11 2012-13 2013-14 2014-15 08 09 10 12 SBI 8.11 8.76 19.72 24.44 71.18 123 148.93 115.8 PNB ND ND 4.19 0.5165 ND 3.244 2.937 3.58 BOB ND ND ND ND ND 6.99 15.3 17.83 Canara ND ND ND ND ND 11.3 41.97 30.396 BOI ND ND ND ND ND 1.1 7.83 11.85 Union of India ND ND ND 1.76 5.5 1.24 17.8 13.25 Indian ND ND ND ND ND ND 2.42 1.18 IDBI ND ND ND ND ND 0.1053 12.2 26.29 Allahabad ND ND ND ND ND ND 0.2968 8.55 Corporation ND ND ND ND ND 2.13 1.71 6.16 Syndicate ND ND ND ND ND ND ND 2.14 OBC ND ND ND ND ND 3.92 7.59 ND Andhra ND ND ND ND ND ND 2.4 1.06 www.ijirssc.in Page 91
IOB ND ND ND ND ND ND ND 0.25 ICICI 10.7 30 15.3 6.1 23.97 116.56 168 156 HDFC ND ND ND ND ND 39.01 70.37 118.55 Axis 2.46 5.82 7.88 8.05 18.85 42.42 52.45 123.22 Kotak Mahindra ND ND ND ND ND 4.09 3.63 11.97 Yes ND ND ND ND ND 6.5 12.4 15.64 J & K ND ND ND ND ND ND ND 16.13 Federal ND ND ND ND ND ND ND 7.27 IndusInd ND ND ND ND ND 9.13 12.69 17.54 Karur Vysya ND ND ND ND 1.058 0.2793 0.6425 1.14 ING Vysya ND ND ND ND ND ND 2.35 ND Sources: Self computed from the annual reports (2007-08 to 2014-15) of the select commercial banks The Table 4 shows the total amount spend by the commercial banks from the financial year 2007-08 to 2014-15. It also reveals that only SBI from the public sector commercial bank and ICICI bank and Axis bank from private sector commercial bank disclosed the amount of CSR invested from the financial year 2007-08 to 2014-15.Most of the commercial banks i.e. 20 out of the 24 commercial banks disclosed their amount of CSR investment from the financial year 2012-13 only. All most all the commercial banks except Oriental of Commerce from public sector commercial bank and ING Vysya from private sector have not disclosed their CSR investment in the financial year 2014-15. The same year CSR became compulsion as per the companies Act 2013 with effect from 1 st April, 2014. However, due to merging of ING Vysya with Kotak Mahindra, the information related to CSR were not available at disposal of public in the financial year 2014-15. The amount of CSR spending in Amount can be easily understood with the help of the following diagram. V.Conclusion: Before the introduction of the Companies Act, 2013, none of the regulatory body has prescribed the amount and the percentage of previous year net profit after tax to be investing on CSR activities of the corporate houses. As a result, most of the commercial banks have spent a very small proportion of their previous year s net profit after tax spent on current year CSR activities. However, most of the commercial banks except SBI from the public sector commercial www.ijirssc.in Page 92
bank, ICICI and Axis bank from private sector commercial banks have disclosed their percentage of previous year s net profit after tax spent in current year CSR activities from the financial year 2012-13 only. Whereas most of the commercial banks except ICICI bank have not invested the prescribed percentage of average three previous years net profit after tax spent on the current year CSR activities in the financial 2014-15 which is compulsion as per the section 135 of the companies Act 2013 that should be implement from the financial year 2014-5. The more number of private sector commercial bank have invested more than 1% of previous year s net profit spent on current year s CSR activities than the public sector commercial banks in the both financial years 2013-14 and 2014-15. References: [1] Weforum. (2013). What role should businesses play in society?. Retrieved from https://www.weforum.org/2013/11/what-role-should-businesses-play-in-society [2] CIA. (2016). The world factbook. Retrieved from https://www.cia.gov/library/publications /the-world-factbook/rankorder/2119rank.html [3] World. (2016). The world bank India s profile. Rretrieved from https://www.worldbank.org/en/news/infographic/2016/05/27/india-s-poverty-profile [4] The Companies Act. (2013). Retrieved from http://www.mca.gov.in/ministry/pdf/companiesact2013.pdf [5] Singh, N., Srivastav, R., & Rastogi, R. (2013). CSR practices and CSR Reporting in Indian ing Sector. International Journal of scientific and Research Publication, 3(i2), 1-8. [6] Ahmed, K. (2013). Corporate Social Responsibility practices of Commercial s in Bangladesh: A case study on southeast Ltd. IOSR Journal of Business and Management, 12(1), 13-18 www.ijirssc.in Page 93