BankingLec 1, 2&3.pptx

7/27/2019 BankingLec 1, 2&3.pptx

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LECTURES 1,2 &3

2013-2014

MBA- BANKING

Corporate Social Responsibility & Corporate

Governance


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Course Outline Detail session plan Assessment method

Internal Evaluation

Mid Term 20 Marks

Assignment 1- 5Marks

Assignment 2 10 marks

Written Assignment- 15 Marks External Evaluation

Final Examination - 50 Marks

Reading list


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Compliance, Expected, DESIRED

Mid TermAssignments

Finals

Readings

Assessment

Working

Relationship


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Important Websites

www.bsr.org : Business Social Responsibility

www.wbcsd.org : World Business Council forSustainable Development

www.worldbank.org :The World Bank www.csrforum.com : Corporate Social Responsibility

Forum

www.infochangeindia.org : Info Change India

www.undp.org.in : United Nations DevelopmentProgramme

www.bitc.org.uk : Business in the Community


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What is a

Corporation?


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What is a corporation?

The corporation is the dominant form of business entity

in the modern global economy.

A corporation is essentially defined in terms oflegal

status and the ownership of assets.

Corporations have three key features:

1. Corporations are typically regarded as artificial personsin the

eyes of the law

2. Corporations are notionally ownedby shareholders who have

limited liability. Shareholders not responsible for the debts

3. Managers and directors have a fiduciaryresponsibility toprotect the investmentof shareholders


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The current global economic scenario


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Global economy downturn continues

Collapse of trust in capital markets

Obsession of the financial markets with short term gainsover long-term considerations leading to sustainability risks


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Crisis and its Impact

Financia

l

crisis

Severestcreditcrunch andrecession

Growth andaccess toexternalfinancingare subject

tounusuallylargedownsiderisks.

R

ecessioni

n

developed

countries

Affectingtrade andfinancialmarket

channels indevelopingcountries S

olvency

risk

Bank equityprices andcreditpremiums

reflectserioussolvencyconcerns


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Impact of crisis on selected countries

-30

-25

-20

-15

-10

-5

0

Tanzania Kazakhstan Chile Latvia

Fiscal balance

Net capital flow

Real GDP

Source: Global Monitoring Report


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Socio- Economic Impacts

Global poverty(estimated 925 million hungry people in the world, 13.1percent, or almost 1 in 7 people are hungry)

Increase in inequality and growing food prices

Increase in reverse migration

Expansion of the informal economy

Small and Medium Enterprises adversely affected


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Reason for the crisis which has affected every

country across the globe


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Globalization is

Phenomenon of increased economic integrationamong nations , characterized by the movement ofpeople , ideas, social customs and products/servicesacross borders

Deepening and speeding of worldwideinterconnectedness in all aspects of life

Process by which network of interdependencebecomes large and continuous


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A process characterized by

Reducedtransportationcosts/ Increasein the speed oftransportation

Opening of newmarkets

Lowering oftariffsworldwideboostedinternationaltrade

Revolution ininformation andcommunicationtechnology


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In what way has organizations added value

to the society/individuals in a globalized

economy?


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Benefits of globalization

New jobcreation Growth ofinternationaltrade ( FDI)

Increase in thevariety of goods& services

available toconsumers

Fusion ofscientific data

and rules toform a uniformnetwork ofdatabase

Essentially based on the benefits of free trade


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Trade

Developing countries share of international trade flows has

risen steadily, from 30 percent in 1995 to an estimated 45percent in 2010.India had established itself as the world's

India-second-fastest growing major economy

FDI

Emerging and developing countries now hold two-thirds of all

official foreign exchange reserves India-India--US$ 1,97,935 million ( April 2000- April 2011)

2025

Six major emerging economiesBrazil, China, India, Indonesia,the Republic of Korea, and the Russian Federation willcollectively account for more than half of all global growth.


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Have the Benefits of Globalization Reached All?

What is the Debate?
http://wdr2011.worldbank.org/Violent+Conflict+and+Insecurity


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Is globalization a force for

economic growth, prosperity,

and democratic freedom?

Or is it the dominance of developed

countries in decision-making, at the

expense of poorer, less powerfulnations?

Does globalization only benefit the rich

or can the poor take advantage of it toimprove their well-being?

Is it a force for environmental

devastation, exploitation of

the developing world, and

suppression of human rights?


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Norway-1

Australia- 2

New Zealand- 3USA - 4 Ireland-5

Japan- 11

Singapore- 27

India ranks 134 ( Bottom 50)

China-89, Brazil 73, Russia-65

SriLanka 91

Pakistan 125

Bangladesh- 129


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13.1 percent, or almost 1 in 7 people are hungry

1.4 billion people live below 1.25 $


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India home to quarter of worlds hungry people

Source: World Bank 2010


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Nine planet Earths would be required to absorb the

world's carbon if every person had the same

energy-rich lifestyle as people in developed

countries.Nearly one billion people live in slums. 2.5 billion

people-nearly half the population of the

developing world-live without adequate

sanitation.

75 million still miss out on education-34 million

boys and 41 million girls.

More than 90% of children in developing

countries are enrolled in primary schools and

54% attend secondary school


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A child born in a developing country is over 13 times more likely to die within the first five yearsof life than a child born in an industrialized country

Malaria kills a child every 30 seconds. It infects 350-500 million people each year, killing 1 million

More than 500,000 women in developing countries die every year in childbirth or duringpregnancy.

In 2006, nearly 61% of women gave birth with the help of a midwife or doctor, compared to 55%in 2004

Women have more access to employment now than ever before. But they still earn one-third

less than men.

In 2008, women held 18% of parliamentary seats worldwide


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Downside of globalization : Labour &

Health

Loss of jobs due toindustrial restructuring

Rising income inequalitybetween low-skilledand high skilled workers

Increase in supply oflabour puts downwardpressure on wages

Investments leading tosweat shops

Health conditionsaffecting people acrossboundaries, culture &generations

Infectious diseases:HIV/AIDS, TB, Influenza,SARS

Lifestyle diseases andconditions: obesity, lungcancer, heart disease,STDs, Type 2 Diabetes


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Downside of globalization: On environment

Global warming

Agricultural development and food security

Water stress and water insecurity

Rising sea levels and exposure to climate disasters

Environmental pollution Loss of bio diversity


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A World increasingly shaped bySustainable Development issues

Climate Change

Water

Bio-diversity and ecosystem related

issues

Development and poverty related

issues


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HungerIndex 66out of 88countries

Peace

Index 135/153countries

CorruptionPerceptionIndex 87/178

EnvironmentSustainabilityIndex101/146

Can Business Environment Flourish?


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What can be done to

correct theimbalance?

How to build a fair globalization to

reduce poverty and inequality &

sustainable development?


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In 2000, 189 nations

made a promise to free

people from extremepoverty and multiple

deprivations.

This pledge became the

eight Millennium

Development Goals to

be achieved by 2015


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How has India Fared in MDGs?


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Poverty &Hunger

Declined from about 320 million (36 percent of totalpopulation) in 1993-94 to about 301 million (27.6 percent oftotal population) in 2004-05.

The country is expected to have a burden of about 279million of people (22.1 percent) living below the poverty linein the year 2015.

Achieve

UniversalPrimary

Education

India is on-track and in some cases, ahead of targets thatrelate to universalizing primary education in India. GrossEnrolment Rates for both girls and boys in 2006-07 crossed

100%.

GenderEquality &

Empowerm

ent

Participation of women in employment and decision makingremains far less than that of men and the disparity is not

likely to be eliminated by 2015. Labour market openness to women in industry and services

has increased by only 6 percentage points, from 13% to 18%between 1990-91 and 2004-05.


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U5MR

Declined from 125 per 1,000 live births in 1990 to 74.6 per 1,000 livebirths in 2005-06. U5MR is expected to further decline to 70 per1,000 live births by 2015. This means India would still fall short of the

target of 42 per 1,000 live births by 2015.

MMR

Between 1990 and 2006, there has been some improvement in theMaternal Mortality Rate (MMR) which has declined to 254 per

100,000 live births as compared to 327 in 1990. However despite thisprogress, India is expected to fall short of the 2015 target by 26points.

Health

Malaria diagnosis has declined from 1.745 in 2005 to 1.52% in 2009. HIV - reduced from 5.5 million in 2005 to 2.39 million in 2009

TB is under control. 40 % is still infected


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Forest coverhas increasedto 21.02% and

protectedareas cover

about 4.83% ofthe countrys

total land area

Proportion ofhouseholds

having accessto improved

water sourcesincreased from68.2% in 1992-93 to 84.4% in

2007-08

Theproportions of

householdswithout toilet

facilitiesdeclined from

70% in 1992-93to about 51%

in 2007-08

At current

progress, the

country is

unlikely toachieve the

target of

reducing the

proportion ofhouseholds

having no

access to

sanitation to

38% by 2015.

f


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MDG 8 Developing a Global PartnershipforDevelopment

Developing countries primary responsibility for achieving MDGs 1-7mobilising domestic resources, ensuring good governance,

policy reforms and so on

Developed countries also have obligation (MDG 8) to help countries

achieve MDGs 1-7 Expand market access to increase trade

Better access to technological progresseg bridging digitaldivide, access to HIV/AIDS treatment and other measures

More Overseas Development Assistance


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If the private sector does not deliver economic growth andeconomic opportunityequitable and sustainablearoundthe world, then peace will remain fragile and social justice a

distant dream. That is why I call today for a new partnershipbetween governments, the private sector and theinternational community.

Kofi Annan, SG of the UN, Davos, 1999


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Why should

businesscontribute to

these MDGs?


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Need for Intervention of Business for Sustainable

Development If business has to be developed, the society needs to

be developed, business sector cannot flourish in anycountry, if the environment required by business isnot conducive.

Increasing social issues impacts the entire society ingeneral and business in particular because to a largeextent business is dependent on the society for itsgrowth and prosperity.


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Need for Intervention of Business for Sustainable

Development

The most fundamental impact on society is fromtechnological and social change.

Creation of new cultural and social attitudes

New set of relationships between the businessfirm and the surrounding society.

Stakeholders, who have long remained dormant,have stirred awake and are now proving

themselves as major forces to be reckoned with.


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Need for Intervention of Business for Sustainable Development

Challenges in the 21st Century cannot be tackled byyesterdays rule of governance.

There is a need to develop new ways of thinking andnew approaches to governance at every level of

society.

It is an accepted fact, that, there are crucial linkages

between economic growth, human development,social cohesion and environmental sustainability.


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Perspective on Business Intervention for

Sustainable Development Regulatory compliance

Increased labour productivity

Value alignment : Organizational values and personal values of

employees

Crucial linkages between economic growth, human

development, social cohesion and environmental

sustainability

Demand from stakeholders


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Corporate payoff: Innovation & Repositioning Corporate Payoff: Growth & Trajectory

Corporate Payoff: Cost & Risk Reduction Corporate Payoff: Reputation & legitimacy

Source: Hart, Stuart.(2010). Capitalism at the Crossroads: Next Generation Business Strategies for a Post-Crisis World


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Any Questions?

BankingLec 1, 2&3.pptx

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