Social Responsibility of Commercial Banks
Social responsibility means obligations of decision makers to take actions which protects and improve the welfare of the society as a whole along with their own interest. Now a days ,the aim of business is no more only profit maximisation . There has been growing acceptance of the view that business should be socially responsible which says the business enterprise which makes use of the resources of society and depends on society for its functioning should discharge its duties and responsibilities in improving the welfare of the society.
According to K.K.Andrew,''social responsibility may be taken to means intelligent and objective concern for the welfare of the society.
Banking is a service industry which touches the lives of millions of people. It is a potent force that can bring about socio-economic transformation in the country.The commercial banks were serving only in metropolitan cities and big towns catering to the needs of large industries and big borrowers who could offer various securities.Such a banking was called class banking . In order to make the bank more responsive to the needs of the society, 14 commercial banks were nationalised in July 1969.Since then there is structural and qualitative changes in the profile of banking. The banks perform social obligation by serving the interest of various sections of society such as large business, small business agriculture,weaker sections of the society, women,minority communities ,students etc. In the following section, an attempt has been made to assess the extent to which banks have fulfilled their social responsibility.
(1) Banking Facilities to Unbanked Areas
The most significant development which has taken place in the past two decades in the field of banking in India is the spread of network of branches in unbanked , semi urban and rural areas . The opening of branches is essential to develop banking habit , mobilise saving of the people and implement projects for rural development and upliftment of economically weaker sections. The banks have made available banking facilities in all parts of the country. Consequently the average population per bank office has come down from 65,000 in July in 1363 to 15,000 in 2005. In a period of three decades the class banking is changed to ''Mass Banking", serving all sections of the society. The number of branches in rural areas was 31,904 in september 2005.
(2) Deployment of Credit to Neglected Sections of the Society
Traditionally, the commercial banks were financing trade , commerce and industry. Consequently the farmers,craftmen and other self-employed persons could get their requirement of credit to be met either by money lenders or co-operatives. After nationalisation, the commercial banks started extending credit to small - scale industry and small borrowers. However , the overall quantum of such credit was much below the requirement of small farmers ,small enterpreneurs etc. To overcome this drawback the Lead Bank Scheme was introduced which contributed to channelise the bank credit to various sections of the economy . The concept of "priority sector" was introduced which covered agriculture ,small scale industry , professionals, small transport operators, retail trade and small business. The target and sub targets for credit to different sections were stipulated and achieved.
To improve quality of lending and to ensure that credit is used for increasing production , productivity and income levels of rural people , the Service Area Approach was adopted .The banks have assisted in the provision of gainful employment to lakh of farmers , craftsmen and self employed people. Besides, through their support ,the banks have helped in the growth of agricultural and industrial output. A large number of special programmes of lending have come up in the past two decades adding new responsibilities banks.Twenty point programme, Different Interest Rate Scheme, self employment programme for urban poor, self-employment schemefor educated unemployed youth, scheme for Urban Micro Enterprises,Integrated Rural Development Programme and special Food Grains Production Programme are the special programmes implemented for the welfare of neglected sections of the society
.
(3) Bank Finance to Small - Scale Industries
The banks have been giving thrust to financing of small-scale units,village and cottage industries . Beside providing term loans and working capital, they have evolved scheme such as Equity Fund Scheme , Entrepreneur scheme etc.,to finance small-scale units.The banks conduct Entrepreneur scheme etc.,to finance small-scale units.The banks conduct Entrepreneurial Development Programme (EDP) in the backward districts to motivate first generation entrepreneurs to set up small-scale units . Many banks have set up consultancy support to small- scale units and technical guidance to operating staff. They also initiate steps for upgradation of technology of selected groups of small-scale units to make them more competitive.The commercial banks identify sick units and formulate expeditious nursing programmes for the viable units.The public sector banks have been advised to make concerted effort to operationalise atleast one specialised SSI branch in every district. At the end of March 2002,there were 395 specialised SSI branches operating in the country . The amount of credit advanced to SSI was Rs.52,988 crores at the end of March,2003. Of this , share of cottage industries, tiny industries and artisans amounted to Rs .26,939 crores.
The outstanding credit of scheduled commercial banks to small-scale industries was Rs.38,433 crores on 31 march 2004 and to citizens and village industries was Rs.4,912 crores on 31 March 2004.
(4) Small Business Finance
The commercial banks have contributed to the creation of increased opportunities for self-employment in the territory sector by financing retail traders,transport operators,professionals and others.
The outstanding credit of scheduled commercial banks to retail trade was Rs.38,404 crores, transport operations Rs.11,172 crores and professional and other services Rs. 43,926 crores on March 2004.
(5) Financing of Agriculture
The banks provided credit support to various agricultural development programmes , in addition to direct advances. The banks credits to farmers under "Oilseeds Production Programme'',minor irrigation , modernisation of farm practices, drip irrigation,dry land farming and waste land development. State Bank of India introduced an agricultural credit card known as SBI Green Card to give greater liquidity and flexibility to agriculture banks. The total advance extended to agriculture was Rs .96,245 crores in March 2004.
(6) Assistance to Students
The educational loans are granted to individuals for their higher education, research,and higher prevailing rate for pursuing higher aducation.
(7) Assistance to Women
Bank emphasises on providing credit facilities for greater economic reliance of women, especially those belonging to the weaker sections, through development of traditional arts and crafts like tailoring , knitting,and embroidery, financial assistance is also made available to women enterpreneurs for setting up of non- traditional ventures such as manufacturing of hosiery goods, typewriting institutes etc.,Several banks conduct entrepreneurs. Public sector banks have been advised to increase the share of credit to women to achive a target of 5% of net credit by 2004.
The bank''s, non-banking activities include assistance for research and development activities,donations to charitable institutions, organising social activities like blood donations camps, health chech ups, medicine banks,adult literacy class etc,.
The commercial bank ,thus,extend their service to different sections of the society.
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