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CSR Holiday for Banks in India: Dilemma between CSR and Financial Inclusion
Abstract
Banks in India have been indulging in a lot of activities which they showcase as their contribution in terms of corporate social responsibility. According to Archie B.Carrol an organisation has its obligations towards the society, divided in to four parts in the order of importance namely Economic, Legal, Ethical and Discretionary obligations. It is evident that when the economic, legal and ethical obligations of an organisation are fulfilled, only then it should focus on its discretionary social obligations. The article intends to examine the position of “Financial inclusion” as a matter of social responsibility of the commercial banks. Further, the article intends to critically examine the issue of whether promotion of financial inclusion is an economic or legal or ethical or discretionary obligation of the banks. If it is established as an economic responsibility then the banks should apply all their resources to promote the issue and at the same time ensure more profitability. However, if it is construed to be a legal obligation then the same philosophy would apply, even if it may not enhance the profitability. No business organisation should resort to unethical practices. Hence if the obligation of promoting financial inclusion is assumed to be one of ethical in nature then also it becomes a compulsion based on which the future of banking industry of India would depend. However, if at last the obligation takes the form of discretionary responsibility then it would depend on the policy of the individual banks. The guidelines of the Reserve Bank of India in this matter are also evaluated to identify a proper road map for CSR activities of the banks.
This chapter explores the contrary views on CSR activities of financial institutions by drawing attention to the purported chameleon behavior of banks in promoting various CSR programs, adopting equator principles in lending activity, conducting financial education campaigns to increase the degree of financial inclusion of the population versus the claim about deceptive promotional techniques, practicing abusive contractual clauses in order to maximize profits at the expense of consumers. The chapter is distinguished by the critical attitude towards the behavior of FTNCs which knows significant differences depending on the area of manifestation – in the country of origin or in the host countries, developing countries. In addition, these entities take advantage of international instruments set up such as the equator principles or non-financial reporting standards to create a positive image among stakeholders, although their behavior is not socially responsible.
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