Journal of Analysis and Computation (JAC)

(An International Peer Reviewed Journal), www.ijaconline.com, ISSN 0973-2861

International Conference on Transformation of Business, Management, Economy in
Digital Era.

CUSTOMER PERCEPTION TOWARDS CORPORATE SOCIAL

RESPONSIBILITY OF BANKS
Dr. E. L. RAMAR.,
Assistant Professor,
PG and Research Department of Commerce, Rajapalayam Rajus’ College, Rajapalayam.
Mrs. M.UMAMAHESWARI
Research Scholar, Rajapalayam Rajus’ College, Rajapalayam.
ABSTRACT

Corporate Social Responsibility (CSR) has become of great importance in recent years, very often
through public scandals and mismanagement. Therefore, demands from Customers, Employees,
Statutory bodies and the general public for detailed information about whether companies are
meeting acceptable standards increased enormously. This article sustains that competitive
advantages can be developed when banks implement Corporate Social Responsibility (CSR)
programs systematically and strategically, as demonstrated by data provided by a case study. It is an
imperative to find a proper way to maintain a balance between the customer perception and
customer satisfaction, which is needed for the wellbeing and sustenance of human as well as non-
human world. Balancing the customer perception and customer satisfaction has always been a
challenge for banks. In recent years, bank has brought immeasurable wealth and prosperity. The
search for future requirements of banks is customer perception towards corporate social
responsibility of banks. Perception is a concept to make decisions their available resources such as
time, money etc.

Keywords: Corporate Social Responsibility, Customer, Perception, Banks, etc.

INTRODUCTION

Corporate Social Responsibility is the mechanism through which the corporate

organizations have executed their philanthropic visions for social welfare. It is powerful way
of making sustainable competitive profit and achieving lasting values for stakeholder as well
as shareholder. “Corporate Social Responsibility” is very popular in finance sector, which the
financial crisis did not damages as perceptible as in other countries of developed economics”.
In recent years, an increasing number of companies worldwide have started promoting their
Corporate Social Responsibility strategies in response to greater pressure from customers, the
public and their investors, who expect them to act sustainably as well as responsibly. The
exact definition of CSR is imprecise, however, and its application differs depending on the

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 CUSTOMER PERCEPTION TOWARDS CORPORATE SOCIAL RESPONSIBILITY OF BANKS

industry. Corporate social responsibility can prove to be more profitable for companies and to
extend it survivability in markets because greater awareness on this topic, in both social and
business markets, has been in higher demand. Customers have responded with overall
satisfaction and loyalty when companies have a better CSR, especially in countries like Spain
and Brazil. Culture has an impact on the CSR ratings and studies, as well as human values
across different nations. CSR has been assuming greater importance in the corporate world,
including in banking sector.

CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY

The emerging concept of corporate social responsibility goes beyond charity and
requires the company to act ethically in the company’s business affairs. The triple bottom line
approach to corporate social responsibility emphasizes the company’s commitment to
operating in economically, socially and environmentally sustainable manner. CSR is based on
the idea that successful profitable corporations should take the responsibility for social issues
and manage their business in such a way that maximises profit and stockholder wealth while
also contributing to the resolution of the social problems. The concept involves nations of
human welfare and emphasizes a concern with the social dimensions of the business activity
that have direct connection with the quality of life in the society. The word responsibility
implies that business organisations were believed to have some kind of obligation towards the
society in which they functioned to deal with the social problem s and contribute more than
just economic goods and services. It is a concept whereby the companies integrate social and
environmental concern in their business operations and in their interactions with the
stakeholders on a voluntary basis. The main function of an enterprise is to create value
through producing goods and services that society demands, thereby generating profit for its
owners and shareholders as well as the welfare of the society, particularly through the
ongoing process of job creation. Social responsibility implies the acceptance of a moral
imperative to recognise the duties and obligations arising from a company’s relationship with
customers, suppliers, employers, shareholders and society at large beyond consideration of
profit. It refers to business decision making linked to the ethical values, compliance with the
legal requirements and respect for people and communities and environment.

CUSTOMER PERCEPTION TOWARDS BANK

Customer perception can be defined as perception that customer display when
obtaining, using and disposing of product and services. It focuses on how-individuals make
decisions to spend their available resources (time, money, etc) on consumption related items.
Customer perception can be predicted by intention, attitude and belief. Customers are looking
for lower service charge and better service quality. Customers now a day are more aware,
compare product and services between different providers through the help of direct channel,
internet blogs, and social network. Customers have increased the number of relationship.
Banking customers are giving more priority to self. Service and direct channels followed by
more personalized service. By looking this customer behaviour, banks needs to offer
innovative and more personalized service to attract new customers and satisfy existing
customer.
REVIEW OF LITRATURE

Dr. E. L. RAMAR. And Mrs. M.UMAMAHESWARI 2

 Journal of Analysis and Computation (JAC)
(An International Peer Reviewed Journal), www.ijaconline.com, ISSN 0973-2861
International Conference on Transformation of Business, Management, Economy in
Digital Era.

Das Kanti Sanjay (2013) in his article titled “Corporate Social Responsibility
in Banking Sector in India”- A Comparative Study of Public & Private Sector Banks”
has highlighted Corporate Social Responsibility (CSR) developed very slowly in India
though it was started a long time ago. Corporate Social Responsibility has been assuming
greater importance in the corporate world, including the banking sector. There is a visible
trend in the financial sector of promoting environment friendly and socially responsible
lending and investment practices. The government of India is pursuing the matter relating to
Corporate Social Responsibility and also drafted guidelines for corporate social responsibility
practices time to time. The aim of the research paper is to access the Corporate Social
Responsibility of banks in India. From the case study, it is observed that all the banks are
directly engaged in social banking and development banking approach. It is concluded that
for the Indian banking company whatever the corporate social responsibility activities are
happening are centered on education, rural development, women empowerment, financial
support to weaker sections and helping the physically challenged. In fine, there is a need to
promote a drive in banking companies towards greater accountability on corporate social
responsibility. In order to attain the social objectives, there is a need for framing a corporate
social responsibility policy in every banking company for prioritization of activities on social
spending and allocation of separate funds for this purpose.
Shingh Namrata(2015) in their article titled, “Corporate Social Responsibility in
Banking Sector in India- A comparative study of public and private sector banks”
Education is the most powerful weapon which can be used to change the world and to remove
the darkness from the world. The new concept of corporate social responsibility and how
many banks are adopting this practice in their working. In the recent time banking sector is
one of the emerging sector which contributes a lot in the development of the nation by
providing their support towards the education. Education helps in lighting the darkness of the
society. Today banks are doing expenditure towards different programs related to education;
Banks are distributing books free of cost to the needy people, establishing primary schools
and giving scholarships to the children in the rural areas. Government is also supporting the
importance of education by implementing the Shaaksharta abbiyan. Banks are expending
every year some amount for educating the people, if the people will be educated then the
nation will be developed.

RESEARCH QUESTION, AIM AND OBJECTIVES

Given the above discussion on the customer perception towards CSR of banks and
competitive advantage in India, the following are this study’s research question, aim and
objectives:
Research question
“Does corporate social responsibility contribute positively to customer perception of
the banks in India?”
Research aim
It is a commonly held belief that the financial and reputational performances of a profit
making banks are indicators of its success. It is therefore important for a bank to know if the
investment put into CSR practices is justifiable. Would it result in better financial and

Dr. E. L. RAMAR. And Mrs. M.UMAMAHESWARI 3

 CUSTOMER PERCEPTION TOWARDS CORPORATE SOCIAL RESPONSIBILITY OF BANKS

reputational performances through improvement in customer perception, as the latter is believed

to contribute positively to profitability of banks? Therefore, the research aim is:
 To assess if, how and why corporate social responsibility positively contributes to
customer perception of banks in India context.
Research objectives
Research has shown a positive relationship between CSR, quality perception, trust
and loyalty, and subsequently business performance, and that trust has a direct influence on
loyalty (Aurier and Lanauze, 2012; Choi and La, 2013; Homburg et al., 2013; Mandhachitara
and Poolthong, 2011). However, it is unclear whether the different aspects of CSR (namely
business practice CSR and philanthropic CSR) have the same impact level on quality
perception, trust and loyalty. Therefore, the researcher would like to explore the customer
perception towards corporate social responsibility of banks.
The author refined the research model used in the banks-to-banks context and applied
it in the banks-to-consumer banking context with the following objectives:
 To investigate the relationship between banks practice CSR reputation, perceived
service quality and trust.
 To investigate the relationship between philanthropic CSR reputation and trust.
 To establish the relationship between customer perception and satisfaction.

CSR PRACTICES IN INDIAN BANKS

Rural Branch Expansion: Banks are expanding their branches in rural areas. However,
illiteracy and the low income savings and lack of bank branches in rural areas continue to be
a road block to financial inclusion in many states. Apart from this there is inadequate legal
and financial structure.
Priority Sector Lending: As described by the Reserve Bank of India, Priority Sector lending
means lending to the agriculture, small scale and ancillary industries, new and renewable
sources of energy, cottage industries, artisans, food and agro based processing, education,
housing and weaker section.
Environment Protection: This variable includes all the activities carried out by the banks
for the purpose of environment protection or to reduce the environmental harm by adopting
different initiatives, replacing traditional activities by eco friendly processes or activities in
day to day business. The World Bank has also pressurized the banks not to finance the
projects, which are causing harm to the environment either directly or indirectly.
1. Assistance for rain water harvesting tanks
2. Wild animal protection projects
3. Tree plantation drives
4. Projects related to reduction of carbon emissions
Financial Literacy: As per the Reserve Bank of India, Financial literacy is providing
familiarity with and understanding of financial market products, especially rewards and risks,
in order to make informed choices. It is the ability to know, monitor, and effectively use
financial resources to enhance the well-being and economic security of oneself, one's family,
and one's business. Financial literacy has assumed greater importance in the recent years, as
financial markets have become increasingly complex and as there is information asymmetry
between markets and the common person, leading to the latter finding it increasingly difficult
to make informed choices. In India, the need for financial literacy is even greater considering

Dr. E. L. RAMAR. And Mrs. M.UMAMAHESWARI 4

 Journal of Analysis and Computation (JAC)
(An International Peer Reviewed Journal), www.ijaconline.com, ISSN 0973-2861
International Conference on Transformation of Business, Management, Economy in
Digital Era.

the low levels of literacy and the large section of the population, which still remains out of
the formal financial set-up. Credit Counselling can be defined as counselling that explores the
possibility of repaying debts outside bankruptcy and educates the debtor about credit,
budgeting, and financial management. In view of the above two points the RBI has initiated a
scheme for setting up of Financial Literacy and Credit Counselling (FLCC) Centres by the
banks. Certain banks have not just opened the FLCC centres but have also taken other
measures to promote finance education among people.
Farmer’s Welfare: Indian economy has always been an agriculture based economy.
Although the contribution of agriculture to the GDP of the country has decreased in past
years, a large portion of population still depends upon agriculture for its survival. However,
the agriculture sector is still in a meagre state. Due to the poor economic health of agriculture
sector, India observes a large number of cases of suicide among the farmers. It has been felt
that there is an urgent requirement to promote investments in this sector and welfare of the
farmers. Some of the major activities done by the banks under the farmer’s welfare are as
follows:
 Agriculture Debt Waiver & Debt Relief Scheme
 Loan for Solar Water Heating Systems at concessional rate,
 Rural Extension Education Programmers enabling farmers & entrepreneurs to
improve their productivity/production,
 Establishment of Farmers clubs,
 Farmers’ Training Centres (FTCs),
 Special credit cards for farmers,
 Agriculture knowledge sharing Programs,
 National insurance programs for agriculture
 Financing rural go downs and cold storages/warehouses,
 Setting up agriculture clusters for better farming
 Commodity finance against pledge of warehouse receipts of agro commodities

BANKING SECTOR AND CSR

As per the instruction of the RBI, majority of the banks started their Corporate Social
Responsibility. Government reduce the tax only for the bank those adopted CSR.

FEDREAL BANK
The bank plan and implement several educational programs
1. Building School infrastructure
2. Training for fresh Teachers
3. 50 Scholarship to financial backward students (Kerla & Tamil Nadu)
4. Vehicles sponsored to Education Institutions
5. Career Guidance program
6. Computer distribution to Rural Schools

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 CUSTOMER PERCEPTION TOWARDS CORPORATE SOCIAL RESPONSIBILITY OF BANKS

ALLAHABAD BANK
1. Educational support.
2. Poverty eradication.
3. Rural development.
4. Vocational training to unemployed.
CANARA BANK
1. Rural Clinic Service
2. Rural Service Volunteer Scheme
3. Jalayoga Scheme
4. Rural Resource Development Centre.
UNION BANK OF INDIA
1. Highway Garden
2. Exhibition- Physically Challenged people
3. Farmer’s Club.
4. Village Knowledge Centres.
5. Rural Development.
6. Educational support.
PUNJAB NATIONAL BANK
1. Call Centre- Physically Challenged
2. Ambulance Sponsored to St. John’s Health Service
3. Free Day Care centre
4. PNB Farmer Welfare Trust and Farmers Training Centres
6. Model Villages
7. PNB century Rural Development Trust
8. Financial support to vulnerable sections of society through micro financing.
AWARDS FOR CSR
The Government of India and RBI give more awards for CSR. That are
1. Global CSR Awards
2. Golden Peacock Award for CSR
3. Asia’s Best CSR Practices Awards
CONCLUSION
Banking sector in India is showing interest in integrating sustainability into their
business models but its CSR reporting practices are far from satisfaction. There are only a

Dr. E. L. RAMAR. And Mrs. M.UMAMAHESWARI 6

 Journal of Analysis and Computation (JAC)
(An International Peer Reviewed Journal), www.ijaconline.com, ISSN 0973-2861
International Conference on Transformation of Business, Management, Economy in
Digital Era.

few banks which report their activities on triple bottom line principles. As a matter of fact,
the standards for rating CSR practices are less uniform in comparison to that for financial
rating. This leads to problem in comparison of corporate houses and determining the CSR
rating. Indian banks are doing lot of CSR activities.

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3. ABA Presents the First Annual Community Commitment Awards [Electronic source] / American
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Dr. E. L. RAMAR. And Mrs. M.UMAMAHESWARI 7