Sustainable Banking: Changing Face of Corporate Social Responsibility

Sujoy Kumar Dhar

Faculty Member
IBS Business School, Kolkata
Abstract

The major emphasis of banking players is placed on financial governance, financial soundness,
financial discipline and corporate governance. The banking sector players are unable to cope
with macro economic, social and ecological challenges. Banking players are now indulging
themselves in corporate sustainability practices. Sustainable banking provides a new dimension
in the financial sector. A United Nations (UN) initiative, the Global Compact, was launched
in 2000 to bring companies together with UN agencies, labour, and civil society to support ten
principles in the areas of human rights, labour and the environment, and anti-corruption. The
Equator Principles were developed by private banks, with the support of the International
Finance Corporation and the World Bank, as a voluntary code. They constitute a set of
guidelines which banks can sign up to voluntarily, but which then prescribe certain requirements
to be followed with regard to consideration of environmental and social issues in their project
financing. The National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business released by the Ministry of Corporate Affairs, Government of India
in July 2011.The objectives of the research work are to study the evolution of global sustainable
banking and to analyse the business responsibility practices of selected Indian banks. One public
Sector Undertaking bank, Bank of Baroda and another private sector bank, Axis bank are
considered for the study. The research paper has taken into consideration the secondary data
available in several research articles published in the different reputed national and
international journals downloaded from EBSCO host and Emerald. Apart from these, different
knowledge reports available in the public domain are also considered as the source of key
information inputs. The proposed research work will provide a new dimension in the literature of
sustainable banking.
Keywords
risk, global, principle, report, business, responsibility

Electronic copy available at: http://ssrn.com/abstract=2803059

1.

Introduction

The elements of corporate social responsibility are not a new phenomenon nor indeed are the
business practices associated with it. According to the World Business Council for Sustainable
Development1 (WBCSD), The Corporate Social Responsibility is the continuing commitment
by business to contribute to economic development while improving the quality of life of the
workforce and their families as well as of the community and society at large2. The Corporate
Social Responsibility (CSR) implies producing positive consumption3 and production4
externality in order to add value to the all citizens of the nation. The company is an artificial
entity as it has neither its own body nor its own sole. Therefore both the external and internal
stakeholders of the company are expected to discharge their triple bottom line5 duties in order to
provide maximum benefit to the maximum number of individuals. According to the renowned
Classical Economists like Adam Smith and Milton Friedman, ethics and business are not at all
related with each other. The business should concentrate on the maximization of shareholders
wealth and social problem should be handled by the Government. In spite of this separatist view
of ethics, nobody can deny the fact that every corporate entity should conform to certain value
system, moral standards for long term sustainability in the market.
1

The World Business Council for Sustainable Development (WBCSD) is a CEO-led organization of forwardthinking companies that galvanizes the global business community to create a sustainable future for business,
society and the environment. Through its members, the Council applies its respected thought leadership and
effective advocacy to generate constructive solutions and take shared action to drive business action on
sustainability in the coming decade and beyond. The WBCSD aims to be the leading voice of business that will
support companies in scaling up true value-added business solutions and in creating the conditions where more
sustainable companies will succeed and be recognized.
2
http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility.aspx
3
Consumption externality takes place when consumption functions of individuals are interdependent in nature.
Positive consumption externality happens when social benefit is more than the private benefit or social cost is less
than the private cost. A persons wellbeing is enhanced if his neighbours property is well maintained. It is the
instance of positive consumption externality. In traffic congested road, entrance of another four wheeler creates
queue much longer. It is the example of negative consumption externality.
4

Production externality takes place when production functions of individuals are interdependent in nature. If
performer of an activity is unable to appropriate all the benefits of the activity or he is unable to incur all the cost
associated with it, technological externality takes place. If fire prevention machine is installed in on factory, the
nearby factory will get benefit from it as fire will not spread from that factory to it though the later one is not paying
anything for the benefit. It is the example of positive technological externality. If there are adjacent mines and more
water is pulled by one mine, less water is available for the rest of the mines which is nothing but creating a negative
technological externality.
5

Triple bottom line is the accounting framework with three parts- social, environmental and economical. It
emphasizes that apart from earing economic profit, companies are required to take into consideration the
environmental and social aspect.

Electronic copy available at: http://ssrn.com/abstract=2803059

Priority of the ethics in business becomes crystal clear from the comment made by the renowned
Economist Milton Friedman in 1970 that If businessmen do have a social responsibility other
than making maximum profits for stockholders, how they know what it is. Few trends could so
thoroughly undermine the very foundations of our free society as the acceptance by corporate
officials of a social responsibility other than to make as much money for their stakeholders as
possible. Mr. David Varney, Chairman, Business in the Community, opined in the year 2003
that We are the drivers of the prosperity that is the only long term answer to social problems.
The term of sustainable banking implies prudent banking towards sustainability in ecological,
social, financial and economic dimension of a nation, (Fien and Macleod, 2010). The theme of
sustainability can be integrated and implemented through the pursuit of environmental and
social responsibility in a bank's operations through environmental initiatives such as recycling
programs or improvements in energy efficiency and socially responsible initiatives for instance
support for cultural events, improved human resource practices and charitable donations
(International Institute for Sustainable Development,2013).
2. Definition of the Problem
Traditionally, banks have overemphasized the financial aspects of their banking activities. Banks
usually underscore the need to fulfil their financial commitment for increasing net interest
income, earning per share and profitability as well as reducing the value of non-performing
assets in majority of the cases. The Basel Committee of Banking Supervision (BCBS) has
addressed different risks faced by a bank which includes credit risk, market risk, operational risk
and liquidity risk. The BCBS recommended risk management strategies for the banks as a policy
prescription which has created an international benchmark for the banking players across the
globe. Banks maintenance of adequate capital as safety cushion in the form of capital adequacy
ratio is mainly to hedge risk of forming non-performing asset. But the major focus of the Basel
norms are on financial sustainability of the banks. As a result banks are unable to cope with
social, ecological and macro economical requirements.

3.

Survey of Existing Literature

A banks CSR obligations, according to

Nwankwo (1991), includes a corporate social

obligation to multiple stakeholders: to maximize profit for shareholders, maintain optimal

liquidity to meet depositors demand, satisfy the legitimate deficit sector demand for credits,
comply with regulators requirements to continue in business, and contribute to the maximum
development of the economy, as well as satisfy its immediate community.
Thompson (1998)

opined in the 1990s increased attention has been paid to the role of the

financial sector in causing

environmental damage and, conversely, helping to raise

environmental standards. In particular, there is an emerging consensus amongst academics and

professionals that the Banks are inextricably linked by their lending and investment practices to
the commercial activities which degrade the natural environment.
Vasiliou and Karkazis(2002) mentioned that sustainable growth model provides a dynamic tool
for examining the impact of alternative strategies for accomplishing several bank objectives
regarding return on assets, dividend payout ratio and leverage as well as asset growth.
McDonald and RundleThiele (2006) discussed that the retail banking customers prefer
initiatives that create direct customer benefits compared to those that have broader social
impacts.
According to Hagstrom,Backstrom and Goransson( 2009), reproduction of competence can be
problematic due to recruitment of new generations of personnel in banks whose values and
attitudes are not compatible with the norms and values reflected in the organizational culture.
Khan( 2010) opined that non-executive directors and existence of foreign nationalities play a
crucial role to improve banks communication on CSR information.
Macve and Chen (2010) said that there is correspondingly a need for continued vigilance by
stakeholder representatives, such as NGOs, in influencing the future development of Equator
Principles.

Blackburne( 2013) concluded that its important that financial organizations have a beneficial
impact on society rather than a detrimental one.

4. Objectives
To study the evolution of global sustainable banking
To analyse the business responsibility practices of selected Indian banks
5. Methodology
The research paper has taken into consideration the secondary data available in several research articles
published in the different reputed national and international journals downloaded from EBSCO host and
Emerald.

Apart from these, different knowledge reports available in the public domain are also

considered as the source of key information inputs.

6.

Global Compact

Global Reporting Initiative (2003) said that a United Nations (UN) initiative, the Global
Compact, was launched in 2000 to bring companies together with UN agencies, labour, and
civil society to support ten principles in the areas of human rights, labour and the environment,
and anti-corruption. The Global Compact6 and the Global Reporting Initiative are two distinct
CSR initiatives; however, with a view to gaining global acceptance and improving corporate
involvement in sustainable development, they have joined forces. The Global compact consists
of four major actions expected of a company7 . To participate in the Global Compact, a
company sends a letter from the Chief Executive Officer (and where possible endorsed by the
board) to Secretary General Kofi Annan expressing support for the Global Compact and its
principles. Simultaneously it sets in motion changes to business operations so that the Global
Compact and its principles become part of strategy, culture and day to day operations. The
company is expected to publicly advocate the Global Compact and its principles via
communications vehicles such as press release, speeches etc. Apart from these, the company is
supposed to publish in its annual report (or similar corporate report) a description of the ways in

The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their
operations and strategies in the area of the human rights, labour, environment and anti-corruption.
7
www. unglobalcompact.org

which it is supporting the Global Compact and its ten principles. This Communication on
Progress is an important tool to demonstrate implementation through public accountability. The
Global Compact offers engagement opportunities to all participants through dialogues8,
information sharing and learning events9 and partnership projects10.
The ten principles of the Global Compact are provided in Exhibit-1.
Exhibit -1 Global Compact Principles
Human Rights
Principle -1 The support and respect of the protection of international human rights.
Principle -2 The refusal to participate in or condone human rights abuses
Labour
Principle -3 The support of freedom of association and the recognition of the right to collective
bargaining
Principle -4 The abolition of compulsory labour
Principle -5 The abolition of child labour
Principle -6 The elimination of discrimination in employment and occupation.
Environment
Principle -7 The implementation of a precautionary and effective approach to environmental
issues.
Principle -8 Initiatives that demonstrate environmental responsibility
Principle -9 The promotion of the diffusion of environment friendly technologies.
Anti- Corruption
Principle -10 The promotion and adoption of initiatives to counter all forms of corruption ,
including extortion and bribery.

The United Nation Global Compact (UNGC) publishes annually the Global Corporate
Sustainability Report (GCSR) which provides a tracking of the signatories compliance with the
8

Action oriented meetings that focus on specific issues related to corporate citizenship, globalization and
sustainable development.
9
Local information sharing and learning events whereby participants share experiences and lessons related to
Global Compact Issues. Companies are also invited to develop and share examples of good corporate practices and
lessons learnt on the Global Compact website.
10
The Global Compact encourages participants to engage in partnership projects with UN agencies and civil society
organizations in support of global development goals.

principles over time. Compliance is a process not an event. The importance of the structure
though lies in the fact that provides an internal compass for companies as they seek to find the
alignment within or between internal and external stakeholders that promoted sustainability. The
tracking helps point out the principles which pose the greatest compliance challenges and over
time can become a useful input for regulators and policymakers who obviously have a strong
interest in corporate sustainability since it feeds directly into sustainable development. One
interesting issue highlighted by the GCSR of 2013 is that, notwithstanding the willingness of the
companies, both large and small to sign on to the contract, it is extremely difficult to monitor and
enforce adherence to the principles along the entire supply chain11.
Critical requirement for sustainability reporting12 is information. All stakeholders need to know
what the organization is doing with respect to their and others interests. Every policy decision or
action taken by a company can potentially help or hurt the interest of one or other stakeholder
group. GRI is a structure that facilitates that facilitates this level of transparency and disclosure
by companies .It lays out guidelines for sustainability reporting, which allows all stakeholders to
compare and contrast across companies, not just within a country but across them as well.
7. Socially Responsible Investments
Oulton,(2007: 40)

explained that Socially Responsible Investments (SRIs) considers the

traditional method of measuring business growth by share value, evaluating performance of the
company by Return on Capital Employed, analysing prospects and scope of the company by
future plans and probability to achieve or accomplish the plans.

Simultaneously SRIs

incorporates a further dimension of responsibility or impact of the business in ethical and

environmental areas as well as sustainability and governance of the business. The structure of
Principles for Responsible Investments (PRI) was set up in 2003, as a partnership between the
United Nations Environmental Program Finance Imitative (UNEPFI) and the UNGC. The Mode
of operation is essentially the same as the UNGC, in the sense that the signatories commit to
11

Companies always have to deal with the tradeoffs in relation to costs, reliability of delivery and so on. When they
develop their supply chains and it is difficult to enforce the conditionality of compliance with the principles of the
compact once the chain is in place. However over time, companies that are committed to the principles will
presumably nudge and push their suppliers into compliance. Even if not all producers sign on the compact, there will
be a positive externality from the sustainability viewpoint as more and more producers particularly small and
medium sized ones find that it actually helps their businesses do better.
12
Sustainability reporting discloses the companys policies and actions with reference to an Environmental-SocialGovernance (ESG) template. It can be used in conjunction with standard financial report to make a comprehensive
assessment of the companys overall balancing of stakeholder interests. Since information is the main input into
investment decisions, these reports provide the basis for the two financial pillar of the architecture.

carrying out their business in compliance with some core principles. The difference is target
group. The signatories to the PRI are essentiality fund managers large, small, long term, short
term - the whole range of entities that manage money is included. There are six principles in this
structure which essentially require investors put emphasis on ESH criteria while making their
portfolio choices. The principles are provided in Exhibit-2. They also agree to take active
interest in the practices and compliance with the ESG standards by the companies they invest in
and encourage them to comply with the reporting standards of the GRI.As a way to broaden the
base of responsible investors; they are expected to engage with other investors to persuade them
to adopt the six principles. This is one of two pillars that relate to actual deployment of funds13.
Exhibit-2
Principles for Responsible Investments
Sl. No.

Particulars

Principle 1

We will incorporate ESG issues into investment analysis and decision-making

processes

Principle 2

We will be active owners and incorporate ESG issues into our ownership policies
and practices

Principle 3

We will seek appropriate disclosure on ESG issues by the entities in which we

invest

Principle 4

We will promote acceptance and implementation of the Principles within the

investment industry

Principle 5

We will work together to enhance our effectiveness in implementing the principles

Principle 6

We will each report on our activities and progress towards implementing the
principles

13

It means as more funds are managed according to principles, more companies will have an interest and
incentive in adhering to the principles laid out by the UNGC and communicating them as transparently
as possible through the sustainability reports that the UNGRI supports. Of course the effectiveness of this
mutually reinforcing mechanism depending entirely on how much money is managed by signatories to
the agreement.

8. Equator Principles
Prior( 2008)opined that banks and financial institutions are putting corporate responsibility into
practice by using financial initiatives such as microcredit and microfinance schemes, ethical,
social and environmental funds, low-income banking, and removal of barriers to credit access.
Macve( 2010) opined that much of the literature on corporate social responsibility (CSR) and
sustainability issues deals either with individual company incentives and responses, or with the
role of actual and potential mandatory regulation for all companies.
The equator principles14 were developed by private banks, with the support of the International
Finance Corporation and the World Bank, as a voluntary code. It applies to institutions that
lend for business purposes both banks and non-banks. The signatories to this experiment referred
to as Equator Principles Financial Institutions; agree to base their lending decisions on the basis
of adherence of projects to ten core principles which cover the now familiar territory of ESG.
The ten standards of equator principle are provided in Exhibit- 3. The reason they are called
Equator Principles is that they were viewed by the founding institutions as applying equally to
the northern and southern hemispheres, hence creating a structure of some global uniformity.
They constitute a set of guidelines which banks can sign up to voluntarily, but which then
prescribe certain requirements to be followed with regard to consideration of environmental and
social issues in their project financing.

For a number of years, banks working in the Project Finance sector had been seeking ways to assess and
manage the environmental and social risks associated with such investment activities. In October 2002,
nine international banks convened in London, together with the International Finance Corporation, to
discuss these issues. Four of the banks present ABN Amro, Barclays, Citi and WestLB
acknowledging the general consensus amongst those present, volunteered jointly to develop a banking
industry framework for addressing environmental and social risks in project financing that could be
applied globally and across all industry sectors. At the time, the banks soon concluded that the best, most
commonly known and widely tested environmental and social policy framework in the finance sector
were those established and used by the International Finance Corporation in emerging markets. These
standards included International Finance Corporation s Environmental and Social Safeguard Policies,
Pollution Prevention and Abatement Guidelines (these have evolved into what is currently known as the
Performance Standards) and risk categorization screening criteria. The EPs were launched in Washington
D.C. on 4 June 2003 and were initially adopted by ten global financial institutions: ABN AMRO Bank,
N.V., Barclays plc, Citi, Crdit Lyonnais, Credit Suisse First Boston, HVB Group, Rabobank Group, The
Royal Bank of Scotland, WestLB AG, and Westpac Banking Corporation .
14

Exhibit-3
Ten Standards of Equator Principles
Principle 1: Review and Categorization
Principle 2: Environmental and Social Assessment
Principle 3: Applicable Environmental and Social Standards
Principle 4: Environmental and Social Management System and Equator Principles Action Plan
Principle 5: Stakeholder Engagement
Principle 6: Grievance Mechanism
Principle 7: Independent Review
Principle 8: Covenants
Principle 9: Independent Monitoring and Reporting
Principle 10: Reporting and Transparency

9.Corporate Social Responsibly in India

CSR is not a new term in India (Centre for Social Markets, 2001). As far back as 1965, the then
Prime Minister of India, Lal Sastri, presided over a national meeting that issued declaration15 on
the Social Responsibilities of business. The International CSR movement has certainly arrived in
India. According to a report by the Centre for Social Markets for the International Finance
Corporation(IFC) , many leading foreign Multinational Enterprises and domestic titans ,
predominantly members of the Tata Group, have been standard - setters on core CSR issues
such as labour conditions, health and safety conditions, environmental management ,corporate
governance and integrity( David St. Maur Sheil ,2003) .

15

Business has responsibility to itself, to its customers, workers, shareholders and the community . every
enterprise , no matter how large or small ,must , if it is to enjoy confidence and respect , seek actively to discharge
its responsibilities in all directions. and not to one or two groups , such as shareholders or workers , at the expense
of community and customer . Business must be just and humane as well as efficient and dynamic.

10

10. National Voluntary Guidelines on Business Responsibilities

Taking cue from the global perspectives, Government of India has also adopted necessary
initiatives in the sphere of the Corporate Social Responsibility. The National Voluntary
Guidelines on Social, Environmental and Economic Responsibilities of Business released by the
Ministry of Corporate Affairs, Government of India in July 2011. The Government has adopted
nine areas/principles of Business Responsibility.
P1 Business should conduct and govern themselves with Ethics, Transparency and
Accountability.
P2 Businesses should provide goods and services that are safe and contribute to sustainability
throughout their life cycle.
P3 Businesses should promote the well-being of all employees.
P4 Businesses should respect the interests of, and be responsive towards all stakeholders,
especially those who are disadvantaged, vulnerable and marginalized.
P5 Businesses should respect and promote human rights.
P6 Business should respect, protect and make efforts to restore the environment.
P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a
responsible manner.
P8 Businesses should support inclusive growth and equitable development.
P9 Businesses should engage with and provide value to their customers and consumers in a
responsible manner.
All the banks are publishing business responsibility report in the public domain where they
mention their principle wise conformance towards the National Voluntary Guidelines on Business
responsibilities. The details of business responsibility reports of Axis Bank and Bank of Baroda
are provided in exhibit-4 .

11

Exhibit-4
Name

Axis Bank

Bank of Baroda

The Bank has put in place a Code of Commitment to

Bank does not have policy but has arrangements

Micro and Small Enterprises to give a positive thrust

regarding

by providing easy access to efficient banking while

malpractices, embezzlements and misappropriation

promoting good and fair banking practices. The Bank

of funds as under Annual Property Returns (APR)

has laid down process for reporting and redressal of

filed by officers, rotation of staffs, leveraging of

sexual harassment at workplace under its Prevention of

technology,

Sexual Harassment Policy (POSH).

Regular/Surprise/Concurrent

of
bank
P1

vigilance

to

scrutiny

check

of

corruption,

staff

accounts,

audit/inspections

preventive vigilance audit, vigilance Committees at

Zones etc.

P2

The Bank has successfully negotiated a Line of Credit

Bank Bank has adopted more liberal norms of financing to
of USD 70 million from International Finance SHGs. Considering the role played by SHGs in
Corporation (IFC) to facilitate the funding of projects empowerment of women, Bank is focusing on
in areas of renewable energy, clean technology and

financing of women SHGs. Bank is implementing

other energy-efficiency projects. Environmental and

the scheme of financing to women beneficiaries in

Social due diligence as per Banks, Environment and

identified backward districts of the country, as per

Social Safeguard Policy (ESSP) is carried out for all

the guidelines of the Ministry of Finance, wherein

projects funded through this Line of Credit.

the minimum loan amount of ` 50,000/ is being

sanctioned.

150

implementation

districts

are

this

scheme

of

identified
under

for

which

exclusive women SHGs are formed under tie up with

NGOs.

P3

The Bank conducts the employee satisfaction study

Ban Bank has undertaken number of initiatives to

Axis Voices Dil Se in partnership with Great Place to

Work. The survey measures employee perceptions on

work life balance, career opportunities, diversity,
collaboration,
organization.

communication

and

pride

in

the

inculcate health awareness among employees by

forming Marathon Club and conducting Yoga
classes. Bank celebrates Womens Day to recognize
and appreciate the contribution of women staff
members. On Facebook, Bank has launched a group
Team

Barodians,

exclusively

for

serving

employees. Further, to increase the interaction

between management and employees, two way
webcast of internal events has been started.

12

P4

The Bank engages with vulnerable and marginalised

The Bank practices policy of equal treatment of all

sections of society through its products and community

employees without any discrimination and bias on

engagement initiatives.

and

the basis of caste, creed and religion. The Bank

Inclusive banking initiatives, the Bank engages with

extends certain special benefits/facilities/assistance

these sections of the society to create financial literacy

to employees belonging to SC/ ST category such as

and further the agenda of financial inclusion through

pre-recruitment training, pre promotion training and

specialised products. The Bank has launched Asha

scholarship for meritorious students among children

Home Loans which caters to low income segment for

of employees belonging to SC/ST category, from

affordable housing loan options.

Bharat Ratna Dr. Babasaheb Ambedkar Memorial

Through the

Rural

Trust.

P5

The Bank has put in place a Policy on Human Rights to

The Bank is well conscious of the fact that all human

reaffirm its commitment to human rights. The Policy

beings are free and equal, and that the basic human

on Human Rights supplements the Banks Code of

rights of individuals must be respected. The Bank

Conduct and Ethics, which lays down the acceptable

follows such policies/practices that, directly or

employee behaviour on various aspects including

indirectly, do not discriminate on the basis of

human rights. Awareness and trainings on Code of

national origin, citizenship, color, race, belief,

Conduct and Ethics are conducted through e-learning

religion, ancestry, marital status, gender, disabilities,

modules and classroom sessions / talks to promote a

age, sexual orientation, place of birth, social status,

culture of ethics.

or any other basis prohibited by the law. The Bank

prohibits sexual harassment at the work place.

P6

To

systemically

environmental

guide

the

management,

Banks
a

efforts Bank
on The bank does not extend finance to industries which
Policy
on affects environment / produce ozone depleting

Environmental Management has been put in place.

substances. Bank has committed to Ministry of New

The

efforts

& Renewable Energy (MNRE) to extend finance

primarily focus on areas of energy efficiency

aggregating amount of Rs. 12,500 crores during -5-

(including Green Information Technology initiatives),

years period spanning (2015 2019) in Renewable

resource efficiency and renewable energy. The Bank

energy sector viz solar, wind and other renewable

engages with its employee, customers and shareholders

energy projects.

Banks

environmental

management

to garner support for its Green Banking initiative.

The Bank is also cognizant of the environmental
impacts of the projects that it lends to.

13

P7

The Bank along with its subsidiaries works closely

Bank being one of the largest commercial banks in

with collective trade and industry associations. The

the country works closely with policymakers and

Bank, through trade bodies and associations, puts forth

policy-making associations, especially in evolving

number

the policies that govern the functioning and

of

suggestions

while

keeping

larger

stakeholder interest at the core. The Bank promotes

regulation of banking industry, monetary policy,

policies and initiatives that aim to create efficient and

financial inclusion related policies and sustainable

transparent financial system for the country, enhance

development of the banking industry.

financial literacy and improve access of banking

system to the unbanked areas, and support key sectors
of nation building and rural development. The Bank
believes in integrated development of the industry by
sharing and adopting best practices. The Bank also
participates in key projects and initiatives undertaken
by the Government and regulators.

P8

The Bank has a financial inclusion agenda that aims to

Bank has implemented Financial Inclusion project to

serve the unbanked and underserved areas of the

provide banking service in un-banked rural areas

country by providing access to formal banking system

with affordable cost to the rural masses and covered

to millions of people who are currently excluded or

them in main economical stream for inclusive

minimally served. The Banks agenda is aligned with

growth. Considering the need of the segment, bank

the four key pillars of financial inclusion promoted by

has devised special products such as Savings cum

the Government of India savings, credit, remittances,

inbuilt Overdraft facility, Recurring Deposit, Baroda

and insurance and pension.

Kisan Credit Card, Baroda General Credit Card and

Insurance product with low cost premium to cater to
the needs of rural masses. Various models have been
implemented for providing the banking services in
rural and urban areas such as POS based BC model,
Kiosk Banking model and Brick & Mortar branches
models.

P9

Customer centricity is a key element of the Banks

Online customer satisfaction survey was conducted

ethos and is the cornerstone of the Banks value

in the bank through web based mode during

proposition for customers. PROGRESS, the Banks

08.06.2015 30.09.2015. The Survey consists of a

customer service Credo, puts customers at the centre to

questionnaire of set of 15 questions on various

plan and deliver unique customer value. PROGRESS

14

cuts across the Banks products, services, processes,

aspects of customer service and was placed on

competency building, branding and communication to

Banks website to obtain feedback from customers.

ensure seamless service quality. P for Proactive in

Necessary and time bound corrective actions to

approach , R for Right for the customer, O for Own

improve customer service in the deficient areas are

the solution G for Go deeper , R for Remove the

being taken

jargon , E for Error free , S for Simplify and S for

Serve enthusiastically.

11. Conclusion
Sustainable development is a global imperative. The concept gained popularity in Europe and
USA. In Asia, specifically in South Asia, it is a new approach and a handful number of banks
practice, preach, profess, propagate and inculcate the culture of sustainable banking. The norms
and regulations of sustainable banking are enforced either by ensuring a sound corporate
governance framework or by implementing the national governance model where the
Government creates some mandatory rules with the help of different regulatory arms of the
nation. During post liberalization tenure some new generation private banks are trying to
implement the sustainable banking as the policy prescriptions though it is in the nascent stage in
India.
The banks are playing the role of intermediary through which household and corporate savings
of the nation can be channelized into productive investment. In order to patronize rapid
industrialization, productive investment is required. The desired growth rate in national income
can only be achieved if the pace of industrialization accelerates. The top priority agenda of every
nation is to enhance GDP growth rate by increasing per capita income. The banking sector has a
significant contribution to the growth of the nation. The Commercial bank credit as per cent of
GDP picked up steadily from 5.8 per cent in 1951 to 56.5 per cent by 2012 in India (Reseve
Bank of India, 2013). National Voluntary Guidelines on social, environmental and economic
responsibilities of business has been developed by the Ministry of Corporate Affairs,
Government of India and assisted by Indian Institute of Corporate Affairs in July, 2011 (Ministry
of Corporate Affairs, 2011 ). Since financial sector has an indirect relationship with utilization of
natural and social capitals, sustainability has remained as a neglected area in the sphere of
banking sector.

15

The sustainable banking focuses on economic, environmental and social sustainability. Banks are
providing incentives in using green technology by charging lower rate of interest and adopting
penal action against the business houses which are enhancing carbon emission by charging a
higher rate of interest or in extreme case bank may decide to stop lending to the projects which
are financially viable but destroying the ecological balance. Banks might not finance the projects
where socially undesirable goods are produced. On the contrary, banks may become lenient in
generating credit to the social sector projects as in the latter case benefit is percolated to the
downtrodden mass of the society. If all these above mentioned perspectives are not taken into
account, the dream of sustainable banking cannot be fulfilled.

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12. References
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Colgate, Mark (1998). Creating Sustainable Competitive Advantage through Marketing

Information System Technology: a Triangulation Methodology within the Banking. International
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Fien, John and Hilary Macleod, 2010, 'Module 2: Understanding Sustainable Development' ,
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Mcdonald, Lynette M and Sharyn Rundle-Thiele. (2006). ' Corporate Social Responsibility and
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Thompson, P. (1998). Bank lending and the environment: policies and opportunities.
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