Social Responsibilities of Banks

Banks handle the public's savings and control a large part of the country's credit. Because of this powerful position, banks are expected to work not only for their own profit but also for the good of society. This wider duty is called the social responsibility of banks — the obligation of banks to serve the genuine needs of all sections of society and to contribute to the balanced development of the country.

Main social responsibilities of banks:

1. Financial inclusion. Banks should bring banking within the reach of every section of society, including the poor, small farmers, artisans, women, and people in remote and rural areas — for example, by opening no-frills/basic savings accounts and expanding branches and banking outlets to unbanked areas.
2. Credit to priority sectors. Banks are expected to lend a fair share of their credit to priority sectors such as agriculture, small-scale and micro industries, exports, education, and weaker sections of society, so that credit does not flow only to large, already-strong borrowers.
3. Encouraging savings and capital formation. By offering safe deposit facilities and mobilising even small savings, banks help build up the nation's pool of savings, which can then be invested in productive activity.
4. Balanced regional development. Banks should spread credit and banking services to backward and less-developed regions, not concentrate them only in prosperous cities, so that development is more even across the country.
5. Consumer/customer protection and fair dealing. Banks should treat customers honestly and transparently — disclosing charges clearly, handling grievances fairly, protecting customers' money and information, and not using unfair practices.
6. Ethical conduct and honesty. Banks should follow honest business practices, avoid financing anti-social or harmful activities, and act with integrity toward depositors, borrowers, and the public.
7. Support to national programmes. Banks help implement government schemes for poverty alleviation, self-employment, and development, acting as partners in the country's growth. …