People’s Bank’s CSR in Sri Lanka

U. A. Weeraratne, Ex. Chief Manager Audit People’s Bank

People’s Bank, a leading commercial bank in Sri Lanka, celebrates its 47th anniversary of its glorious service to the nation on July 01, 2008. The development of any country depends heavily on the financial institutions.

Therefore, the banking sector has a pivotal role to play in the growth of the national economy. The need for a bank fulfilling the wants of rural and co-operative sectors remained as a long felt need until the People’s Bank was established in 1961.

Section No. 4 of the People’s Bank Act expected the bank to work as a responsible corporate citizen committed to deliver service that support and uphold sustainable economic and social development.

People’s Bank strongly believed that harnessing of untapped rural resources was essential for the national development. So, it moved away from the conventional banking pattern and embarked on a distinctive model by drawing its financial, physical and human resources to rural areas, a segment once thought to be unbankabel by the existing banking system.

Today, Corporate Social Responsibility (CSR) has become an imperative compound of business world, as they believe that sustainability can only be achieved, if the society they operate is nurtured.

People’s Bank was able to innovate, focus its competencies on developing financial products with high social value, and create banking habit in the rural sector.

This article assesses the major role played by the People’s Bank, as early as in 1960s, implementing its Corporate Social Responsibility, which is mostly discussed theme in Sri Lanka today.

People’s Bank provided financial support to the rural sector and maintained outstanding relationship with them. Even small branches in the rural areas were also opened as full service branches, offering comprehensive range of commercial banking services including current accounts.

Some significant features of their savings scheme were allowing the customers to open savings account with a small deposit of Rs. 5, ascertaining their identity through Rice Ration Books and age by the horoscope in case of Minor accounts. Even illiterate people were also allowed to open deposit accounts using their thumbprint as the signature.

Thus, it has proved its commitments towards the vision of inculcating savings culture and service to the rural sector of the country, which had been marginalized as an unbankable segment.

Investment Savings Scheme (ISA), a contactual savings scheme, was a “Branded Product” of the bank and a new feature of the banking system.

It was applied as a banking substitute to the existing “Seettu System”, a well-known savings pattern of the rural folk. ISA scheme also assisted them to become creditworthy and eligible to deal directly with the bank.

ISA holders were entitled to obtain credit facilities for any purpose based on their income and ISA instalment, by offering two ISA holders with similar income as guarantors instead of conventional collaterals.

Moving away from the established lending methods, People’s Bank introduced the Pawn Broking System, another innovation, to relieve the people from the clutches of indebtedness, amidst the conservative attitudes of the traditional bankers.