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This study is done by me to full fill the partial requirement of BBA program from
Department of Bachelor business administration . Since Green Banking is a new concept in
the Banking sector, I have become interested to study this topic. Bangladesh Bank wants to
implement Green Banking in Bangladesh by three phases. It has already successfully
implemented two phases. I want to see whether all banks have implemented this or not. I
want to see the comparative performance of Conventional and Islamic Banks. The banking
sector influences the economic growth and development in terms of both quality and
quantity, there by changing the nature of economic growth. Banking sector is one of the
major sources of financing investment for commercial projects which is one of the most
important economic activities for economic growth. Therefore, banking sector can play a
crucial role in promoting environmentally sustainable and socially responsible investment.
Banking sector is generally considered as environmental friendly in terms of emissions and
pollutions. Internal environmental impact of the banking sector such as use of energy, paper
and water are relatively low and clean. Environmental impact of banks is not physically
related to their banking activities but with the customers activities. Therefore, environmental
impact of banks external activity is huge though difficult to estimate. Moreover,
environment management in the banking business is like risk management. It increases the
enterprise value and lowers loss ratio as higher quality loan portfolio results in higher
earnings. Thus, encouraging environmentally responsible investments and prudent lending
should be one of the responsibilities of the banking sector. Further, those industries which
have already become green and those, which are making serious attempts to grow green,
should be accorded priority to lending by the banks. This method of finance can be called as
Green Banking, an effort by the banks to make the industries grow green and in the process
restore the natural environment. This concept of Green Banking will be mutually beneficial
to the banks, industries and the economy. Not only Green Banking will ensure the greening
of the industries but it will also facilitate in improving the asset quality of the banks in future.
Internationally, there is a growing concern about the role of banking and institutional
investors for environmentally responsible or socially responsible investment projects.
Banking institutions are more effective towards achieving this goal for the kind of
intermediary role they play in any economy and for their potential reach to the number of
investors. It is of importance to the banking sector to follow certain environmental evaluation
of the projects before financing. My effort is to find out the comparative performance of
Banks in Bangladesh. I am also interested to find out the major challenges of it. Thereby, I
want to make some recommendations for further improvement.
1.2
Global warming, which is one of the most burning & discussed issues, has the worst impact
on the climate of the planet as a whole. The rapid change in climate will be too great to be
adapted by the eco-systems, since the change have already made direct impact on
biodiversity, agriculture, forestry, dry land, water resources and human health. As such, issue
of global warming calls for a global response. Due to unusual weather pattern, rising
greenhouse gas, declining air quality etc. society demands that business also take
responsibility in safeguarding the planet. (BB Green Banking policy) In line with global
development and response to the environmental degradation, financial sector in Bangladesh
in part has already started playing their roles as one of the key stake holders to address the
issue properly. Bangladesh Bank Governor argued that all need to change mindset about
environmental issues for making a better future through greening financial transactions (Star
2014). To save our planet it is the time to take initiative for green banking. The banks should
priorities loaning the sectors that encourage environmental practices. GB is not limited within
branches green activities, but extends to facilitating green investment/ financing so that a
huge contribution to resource-efficient and low carbon industries, i.e. green industry and
green economy in general.
In general all banks play an intermediary role in the economy; because of this the possibility
for banks to contribute to sustainable development is potentially profound. Banks can also
develop more sustainable products, such as environmental, social, or ethical investment
funds. In creating environmental and social screens, banks can promote socially or
environmentally-geared companies and penalize those who do not conform to these standards
In Bangladesh, we have both conventional and Islamic Banks. They are implementing green
banking accordingly. Here, I have analyzed overall implementation of green banking of
State-own Commercial Banks, Specialized Banks, Private Commercial Banks and Foreign
Commercial Banks based on some parameters like policy formulation, formulation of green
banking unit, budget allocation and implementation etc.
1.3
To complete the BBA program and all the students of the faculty of business studies,
of EAST WEST university Dhaka has to prepare with an objective of gaining practical
knowledge about current business world. In BBA program each and every students have to
submit a thesis report. As a student of Department of BBA I have to do my thesis. Ive
started my thesis report at the end of the final examination of BBA program. I am submitting
my thesis report focusing on Progress on Green banking in Bangladesh: A comparative
study on five categories of banks in Bangladesh. because banking industry can also save
environment through theirs voluntary or corporate social responsibility.
1.5
Methodology:
The study is based on proper methodology which comprises intensive collection of data
related to Green Banking in Bangladesh.
Data collection
For the assessment I collected secondary data. I collected annual report on Green Banking
issued by Bangladesh Bank. I also visited website of different banks including Bangladesh
Bank (BB) to collect this information.
Data analysis
I analyzed comparative Green Banking performance among State-own Commercial Banks,
Conventional Private Commercial Banks, Islamic Commercial Banks, Foreign Commercial
Banks . My analysis is based on average and 24 green banking parameters. I also
analyzed top ten banks in green banking. My data is up to 31/12/2014. In the analysis, I
have used average, percentage, bar and pie chart to present the data. Banking industry of
Bangladesh consists of more than 27 banks including newly issued banks. To make this
report, I have taken four State-own Commercial Banks, 23 Conventional Private Commercial
Banks, seven Islamic Commercial Banks and nine Foreign Commercial Banks. These are
State-own Commercial Banks (SCBs):
1.
2.
3.
4.
1.6
Green Banking is one of the modern concepts in banking industry. In globalization bank has
to participate for maintain environment safe and sound. If a bank cant improve in Green
Banking practices properly then the country will gone great hamper environmentally and in
fact it will face substantial loss. So the scope of the study is very much wide. The report will
attempt to present Progress on Green banking in Bangladesh: A comparative study on five
categories of banks in Bangladesh. Green banking (GB) is a component of the global
initiative by a group of stakeholders to save the climate/environment. In this study it is tried
to find out the present status of green banking practices. An attempt will be made to find out
various problems hindering the growth of the green banking. After analyzing analogous
situation in this areas some steps will be suggested to overcome the barriers to progress in
green banking.
1.7
Green Banking is a new topic. Information is not so available. Besides, Bangladesh Bank
wants to implement it by three phases. It has already implemented two phases. From this
information, I have analyzed whether all banks have followed and initiated all the policies
and procedure in the organization according to Central Bank. Some banks have done well in
this regard. My analysis is based on 38 samples. My findings might be different and could be
more accurate. Due to the lack of time and expertise, I could not analyze every piece of
information. I have selected 4 State-own Commercial Banks, 27 Conventional Private
Commercial Banks, 7 Islamic Commercial Banks,. The time is the most limiting factor in
making my thesis report. As Green Banking is one of the biggest jobs there was lack of
sufficient secondary data. Due to the unavailability, I have used the data of 31/03/2014 in
my analysis. There were not sufficient books, publications, facts and figures. These
constraints narrowed the scope of accurate analysis.
2. Literature Review:
Atiur Rahman (2010) in his paper focused on the present monetary and credit policy of
Bangladesh Ban towards attaining broader financial enclosure. Bangladesh Bank is carry
forwarding with technology driven, innovative, environment and low cost banking approach;
conveying a qualitative change in banking, preparation of monetary policy, application of
advanced banking technology, and use of Information and Communication Technology (ICT)
to extend financial services to the door step of common people. To ensure access to financial
services for all, various initiatives have been taken like trade finance; digitalization of the
financial sector; channeling liquidity into productive and supply augmenting investments
including agriculture, SMEs, Green Banking and CSR activities; expected to lead to more
broad -based inclusive growth and therefore lessen poverty; required for pushing the
country on course to the targeted vision of digital Bangladesh by 2021; the year of Golden
Jubilee of their independence.
Suresh Chandra Bihari (2011) elucidated that Green Banking includes promoting corporate
social responsibility (CSR). It starts with the aim of protecting the environment where banks
consider before financing a project whether it is environment friendly and has any
implications for the future. A company will be given a loan only when all the environmental
safety standards are followed. Green Banking can be efficiently implemented through the use
of technology and policy, he emphasized.
Alice Mani (2011) indicated that as Socially Responsible Corporate Citizens (SRCC), banks
have a major role and responsibility in enhancement of governmental efforts towards
substantial reduction in carbon emission. Banks can practices and initiatives of Green
Banking for sustainable development. The author examined and compared the green lending
policies by banks in India in the light of their compliance and commitment to environment
protection and environment friendly projects.
Green Banking Initiative: opportunities for Bangladesh is a report done by Dr. Shah Md.
Ahsan Habib, Associate professor and director (Training), Bangladesh Institute of Bank
Management (BIBM). From this report I take important information for the purpose of doing
report on green banking. I take the information regarding the role of financial and
nonfinancial organization as well as role of stakeholders in the development of green
banking. How this green banking can be implemented and what are the green banking
practices by banks in Bangladesh would be taken this information summary I take from this
report.
Md. Touhidul Alam Khan wrote an article on Green Banking: Go green, Think green. In his
article he said that in a word, we can say that green banking refers to the attempt of the
banking sector to consider social, ecological and environmental factors with an aim to protect
the environment and conserve natural resources. The banking sector plays a major role in
financing investment for commercial projects, which is one of the most important economic
activities for economic growth. Hence, by taking various measures to save the environment,
the banking sector can play a crucial role in promoting environmentally sustainable and
socially responsible investment. As such, Green Banking is also known as Ethical Banking
and Sustainable Banking. The purpose of Green Banking initiatives taken by central bank is
to ascertain required measures to save the environment and reduce pollution while serving or
financing customers and improve in-house environment management through efficient and
effective use of resources in all the branch and head offices of banks. Bangladesh Bank is
well aware of the environmental degradation situation and has already given time-to-time
directions to all scheduled banks. Commercial Banks are now required to ensure necessary
measures to protect environmental pollution while financing a new project or providing
working capital to the existing enterprises. Banks have been advised to facilitate their clients
with utmost care financing for installation of Effluent Treatment Plant (ETP) in the industrial
units and to finance in Solar Energy, Bio-gas, ETP and Hybrid Hoffman Kiln (HHK) in brick
field under refinance pro-gram of Bangladesh Bank.
Khondokar Morshed Millat et. al had a study on Green Banking in Bangladesh Fostering
Environmentally Sustainable Inclusive Growth Process. They said that Bangladesh is
perusing low-carbon green development without compromising the imperative of faster
economic growth and social development. Development strategies of the Government of
Bangladesh laid down in the perspective plan (2010-2021) and the Sixth Five Year Plan (FY
2011-15) declare clear commitment of pursuing sustainable growth. The countrys
vulnerability to floods, cyclones and to the threat of inundation of large coastal areas from
global worming driven sea level rise makes sustainability a prime development concern.
In a research paper of Dr Kailash Arjunrao Thombre (Assistant Professor, Deogiri College,
Aurangabad) named The New Face of Banking: Green Banking (Vol.1,Issue.II/August
11pp.1-4-ISSN No-2032-5063), he has found a very good impact of green banking in the
economy as well as in the environment. He has mentioned that if green banking can be
implemented, overall pollution in India will substantially be go down and there will be a very
lower pressure on paper and tree.
There are studies showing positive correlation between environmental performance and
financial performance (Hamilton, 1995; Hart, 1995; Blacconiere and Pattern, 1993). Thus,
it is imperative for the banking institutions in the present context to consider environmental
performance in deciding whether to invest in companies or advise clients to do so. The
formation of different rules for environmental management like resource conservation, clean
water act, clean air act, toxic substance control act are also viewed as potentially significant
contributor to the recent increase in environmental liability for banking institutions. Adoption
of these principles will offer significant benefits to banking institutions, to consumers and
also the stakeholders. Credit risks are also associated with lending on the security of real
estate whose value has diminished owing to environmental problems (additional loss in the
event of default). Further, risk of loan default by debtors due to environmental liabilities
because of fines and legal liabilities and due to reduced priority of repayment under
bankruptcy.
The present green consumerism is more concerned with the quality of the products more than
the quantity. In future, market will reward those industries or the companies, which emerge
as the efficient users of the energy and raw materials and will penalize the less efficient one.
Further, the investors in the stock market are equally aware of environmental pollution and
would take a stand against those industries/institutions that do not comply with pollution
norms (Gupta, 2003; Goldar, 2007). So the preferences of the investors will dry up in the
case of polluting units and market capitalization will go down significantly. Thus, financial
institutions should help developing the right instruments to meet the needs of industry to
control environmental impact.
Cathy Du Bois et. al. (2011) has outlined the unique green practices of various industries.
With regard to banking industry, they have listed out certain practices such as(i) Banks
extending loans for hybrid cars with a concessional rate of 0.25 per cent lower than a
traditional CAR (ii) performing online saves fuel, paper, electricity in many ways,(iii)
Banks offering discount mortgage loans for green homes that installs the solar
panels (iv) Go Green Credit Cards used to contribute green movements, (v)
Banks enrolling customers who have switched to online banking in sweepstakes to win
money, etc.
Another thesis paper by Yunwen Bai on Financing a Green Future-An examination of
Chinas banking sector for green finance shows that China needs green financing very much
but their banking and financial institution are not doing it largely. They are in the initial
process and the environment of china is getting worse day by day.
In another article by Md. Touhidul Alam Khan (SEVP, Head of Corporate and Team Leader
of Green Banking Unit of Bank Asia Ltd and Associate Member of ICMAB) on Green
th
banking: Go green, think green published on the Daily Star- 5 June, 2012, He has
mentioned that bank can increase goodwill or improve brand image by showing their
commitment to save and protect the environment.
Green Banking in India is another Discussion Paper Series no. 125/2008 by Pravakar Sahoo
and Bibhu Prasad Nayak (Institute of Economic Growth, University of Delhi Enclave)
where they have told that the banks should play a pro-active role to take environmental and
ecological aspects as part of their lending principle which would force industries to go for
mandated investment for environmental management, use of appropriate technologies and
management systems.
Green Banking Policy of BASIC Bank Limited, Bangladesh (2011) was go forwarded in
response to increasing consciousness over climate change, environmental degradation, need
for urgent measures for sustainable development to be addressed by some of the stakeholders
in the world. Banking system holds a unique position in an economy that can affect
production, business and other economic activities through their procedure for financing
activities which would in turn contribute to protect environment/climate from pollution.
Moreover, efficiency in energy use, water consumption and waste reduction may
significantly contribute for operating cost for many of the large banks of the country.
3.1 Green Banking:
Environmentalism is a broad philosophy and social movement regarding concerns for
methane, nitrous oxide and hydro-fluro carbon is found responsible for distortion in climate
changes. The rapid change in climate will probably be too great to allow many eco systems to
suitably adapt, since the changes have direct impact on bio diversity, agriculture, forestry, dry
land, water resources and human health. However, there is general lack of adequate
awareness on the above issues and -hence there is urgent need to promote certain urgent
measures for sustainable development and corporate social responsibility.
The supreme reality of our time is the vulnerability of our Planet.
2
- John F. Kennedy
To avoid falling into similar trap, the impulse of 'going green' is running faster than blood in
Bangladeshi Incorporations veins. From IT giants to luxurious hotels, from Automobiles to
Aviations, from Mutual Funds to Banks corporate Bangladesh is moving fanatically ahead
with green initiatives. Environment and the business were 'no longer a zero-sum game'.
Things that are good for the environment are also good for business. As a responsible
financial organization of the country with its crucial role in financing the economic and
developmental activities of the country, banks have to play in addressing the above issues,
both in terms of its obligations and opportunities by virtue as a responsible corporate citizen
and as a financier.
3.2 Definition of Green Banking:
Green Banking is like a normal bank, which considers all the social and environmental
factors; it is also called as an ethical bank. Ethical banks have started with the aim of
protecting the environment. These banks are like a normal bank which aims to protect the
environment and it is controlled by same authorities as what a traditional bank do. There are
many differences compared with normal banking, Green Banks give more weight to
environmental factors, their aim is to provide good environmental and social business
practice, they check all the factors before lending a loan, whether the project is environmental
friendly and has any implications in the future, you will awarded a loan only when you
follow all the environmental safety standards.
Defining green banking is relatively easy. Green Banking means promoting environmental
friendly practices and reducing your carbon footprint from your banking activities. This
comes in many forms
1
2
Finding the local bank in your area that is taking the biggest steps to support local
green initiatives.
Green banking can benefit the environment either by reducing the carbon footprint of
consumers or banks. Either a bank or a consumer can conserve paper and benefit the
environment. Ideally, a green banking initiative will involve both. Online banking is an
example of this. When a bank's customers go online, the environmental benefits work both
ways.
Green banking means combining operational improvements and technology, and changing
client habits
3.3 Green Bank and Green Banking:
A Green Bank is an ethical bank, a socially responsible bank and a sustainable bank.
Green Banking is providing innovative green products and support activities that are not
hazardous to the environment and help conserve the environment. Green Banking has a role
to safeguard the planet from unusual weather patterns, rising greenhouse gas, and declining
air quality, with the aim of ensuring economic growth which is sustainable.
Bangladesh Bank is the first central bank in the world which has taken real initiatives,
according to a definite agenda in its vision and mission to play a specific role in Green
Banking by taking responsibility in safeguarding the planet from unusual weather patterns,
rising greenhouse gas and declining air quality Green Banking is not limited only to in-house
green activities, but extends to facilitating Green financing. Green financing through due
diligence checklists under Environmental Risk Management (ERM) Guidelines is not
intended to squeeze investment; rather it is for sustainable finance. Green financing under
Green Banking activities can make a great contribution to the transition to resource-efficient
and low carbon industries, i.e. green industry and green economy in general. A Green
Economy can be thought of as an alternative vision for growth and development; one that can
generate growth and improvements in peoples lives in ways consistent with sustainable
development. A Green Economy promotes a triple bottom line: sustaining and advancing
economic, environmental and social well-being.
The policy guideline for green banking has been devised on the basic of a Green Economy
which, in turn, is based on renewable energy (solar, wind, geothermal, marine including
waives bio-gas and fuel cell), green buildings (green retrofits for energy and water efficiency,
3
residential and commercial assessment, green products and materials and LEED
construction), clean transportation (alternative fuels, public transit, hybrid and electronic
vehicles, car sharing and carpooling programs), water management (recycling, municipal
solid waste salvage, brown field, land remediation, sustainable packaging), land management
3
Leadership in Energy and Environmental construction (LEED) consists of a suite of rating systems for the
design, construction and operation of high performance green buildings, homes and neighborhoods.
(organic agriculture, habitat conservation and restoration, urban forestry and parks,
reforestation and afforestation, and soil stabilization).
3.4 Strategies of Green Banking:
Green banking is an integral part of the Banks environmental policy as applied through its
wider Corporate Social Responsibility strategy. The adoption of green banking strategies will
help the bank to deal with these risks involved in their business operation. Green banking
strategies involves two components such as (i) Managing environment risk and (ii)
Identifying opportunities for innovative environmentally oriented financial products (IFC,
2007).
To manage environmental risk, the banks have to design proper environmental
management systems to evaluate the risks involved in the investment projects. The
risks can be internalized by introducing differential interest rates and other techniques.
Moreover, bank can withdraw itself from financing high-risk projects.
The second component of green banking entails creating financial products and
services that support commercial development with environmental benefits. These
includes investment in renewable energy projects, biodiversity conservation, energy
efficiency, investment in cleaner production process and technologies, bonds and
mutual funds meant for environmental investments etc.
The banking institutions should prepare an environmental risk and liability guidelines
on development of protective policies and reporting for each project they finance or
invest (Jeucken, 2001). They can also have an environmental assessment requirement
for the projects seeking finance. Banks also can issue Environmental hazards
management procedures for each project and follow through. International financial
institutions like International Financial Corporation (IFC), Japan Bank for
International Cooperation (JBIC) have incorporated environmental management into
their business operation. All projects proposals are classified in terms of its potential
environmental impact taking into account factors such as the sector and scale of the
project, the substance, proposed project site, the degree and uncertainty of its potential
environmental impact. Often, the World Banks loans and grants are associated with
certain level of commitment of the beneficiary countries to adopt environmental
protection measures.
The perception towards complying with environmentally norms and standards is
changing over time. Environmental friendly or green technologies also make
economic sense for the banking industry. Adopting environmentally sustainable
technologies or modes of production is no more considered as a financial burden;
rather it brings new business opportunities and higher profit. Green banking saves
costs, minimizes the risk, enhance banks reputations and contribute to the common
good of environmental sustainability. So it serves both the commercial objective of
the bank as well as its social responsibility.
Banks need to be more careful in Bangladesh about the environmental aspects of their
clients and products because (a) future of exports and product market are going to go
through stringent environmental rules and eco-friendly product will have better
market. (b) Increased demand for pollution controls equipment that will require more
financial assistance from banks. (c) Bangladesh Bank may follow environmental
guidelines for the banks in the lines of IFC and Asian Development Bank etc. (d)
recent announcement of the government to use economic instruments for
environmental control may include Banks in future. (e) Big investment projects
supported by international organizations like the World Bank and ADB require
Environmental Impact Assessment (EIA). Therefore the banks should begin
implementing procedures like (i) assessment of risk due to environment (ii)
Environmental audit management (iii) assessment of credit requirement and loan
follow up before investing on different projects. However, since banking sector is
lighting (CFL) can help banks save energy consumption considerably. They have
also adopted the policy to use energy savings lights, to use gradually renewable
energy such as solar panels in all their branches.
Using Mass Transportation System: Banks will take the policy for mass
transportation for staffs working in one place.
4) Green Building: Dhaka Bank gradually will build their office building as per
the code of green building to reduce their carbon footprint as well as to save the cost.
e) Social Responsibility Services: As part of the green banking strategies, they have initiated
a number of social responsibility services like tree plantation campaign, park development,
pollution checkup camps etc. As a token of the initiatives Dhaka Bank Ltd. has already
developed a green square in front of the High Court named Kadam Fountain and another
small park in front of the Dhaka Bank head office. Dhaka Bank also decorated the road island
from Central Idgah to Kakrail Mosque with plantation of tree and flower plant as part of the
Government beatification program.
3.5 Importance of Green Banking:
Until recently, environmental concerns were not considered relevant to the business operation
of banks and financial institutions. Traditionally, banking sectors concern for
environmentally degrading activities of clients is like interfering or meddling in their business
affairs. However, now it is being perceived that dealing with environment brings risks to their
business. Although the banking and financial institutions are not directly affected by the
environmental degradation, there are indirect costs to banks. Due to strict environmental
disciplines imposed by the competent authorities across the countries, the industries would
have to follow certain standards to run their business. In the case of failure, it would lead to
closure of the industrys leading to a likelihood of default to the bank. For example the
enactment of Comprehensive Environmental Response, Compensation and Liability Act in
Compact fluorescent lighting is a fluorescent lamp designed to replace an incandescent lamp; some types fit
into light fixtures formerly used for incandescent lamps. The lamps use a tube which is curved or folded to fit
into the space of an incandescent bulb, and compact electronic ballast in the base of the lamp.
5
1980 (CERCLA ) in the US in late 1980s has resulted in huge loss to the banks in the US as
banks held directly responsible for the environmental pollution of their clients and made to
pay the remediation cost. This is the reason for which banks in the US are ahead of other
countries in integrating environmental concerns into their business operations. In the recent
years several other countries (more in Europe) are seen adopting policies that have made
banks responsible for the misdeeds of their clients. Therefore, the financial institutions need
to engage proactively with the stakeholders on environmental and social policy issues and
evaluate the impacts of their clients investment. In turn, that would force the customers to
take care of their management of environmental and social policy issues relating to
investment. This should cover all project financing activities across all industries. The
importance of Green Banking is immense for both the banks and economy by avoiding the
following risks involved in banking sector.
Credit Risk: - It can arise indirectly where banks are lending to customers whose businesses
are adversely affected by the cost of cleaning up pollution or due to changes in environmental
regulations. The cost of meeting new requirements on emission levels may be sufficient to
put some companies out of business5. Credit risks may be higher due to the probability of
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly
known as Superfund, was enacted by Congress on December 11, 1980. This law created a tax on the chemical
and petroleum industries and provided broad Federal authority to respond directly to releases or threatened
releases of hazardous substances that may endanger public health or the environment
The adoption of green banking strategies will help the bank to deal with these risks involved
in their business operation. Green banking strategies involves two components (1) managing
environment risk and (2) identifying opportunities for innovative environmentally oriented
financial products (IFC, 2007). To manage environmental risk, the banks have to design
proper environmental management systems to evaluate the risks involved in the investment
projects. The risks can be internalized by introducing differential interest rates and other
techniques. Moreover, bank can withdraw itself from financing high-risk projects. The
second component of green banking entails creating financial products and services that
support commercial development with environmental benefits. These includes investment in
renewable energy projects, biodiversity conservation, energy efficiency, investment in
cleaner production process and technologies, bonds and mutual funds meant for
environmental investments etc.
The importance of green banking cannot be denied because of the following reasons.
Cash back will be credited to all existing account holders shifting into Green.
Cash back will be credited to all new customers opening Green accounts .
Rationalization of paper use by giving free access to do all the banking transactions
through Internet Banking, SMS Banking, Phone Banking and ATM Banking.
Free Electronic Bill Payment Services
E-Remit services for remitting funds to the customers' home country which is a
unique service.
E-Statement will be generated and sent to the customers' email.
Online Account opening form for opening Green Account.
Customer can opt for Go Green through various channels through Online Banking,
Branches and Call Centre
Ongoing investment in electronic and telephone banking that means customers can
leave the car at home and bank anytime anywhere.
Easy automatic payments reduce the need to write and send cheques by mail.
Some banks are donating to conservation charities as an incentive for choosing green
products or paperless statements.
Some banks offer mutual funds that focus investment in green companies.
One bank offers a global climate change mutual fund that invests in companies
that are mitigating the effects of climate change.
One bank is offering a special line of credit to help homeowners invest in energyefficiency upgrades for their home.
Some banks offer credit cards co-branded with environmental charities.
One bank offers an automobile insurance product that allows customers to offset CO2
through a tree-planting program.
Green Checking - converting checking accounts to online banking
Green Money Market Accounts - converting savings accounts to online banking
Green CDs bonus rates for online banking
Green Loans better rates for energy-efficiency projects
Green Mortgages better rates for energy-efficient houses
Online Bill Payment
Reward Checking Accounts
measures to save the environment and reduce pollution while serving or financing customers
and improve in-house environment management through efficient and effective use of
resources in all the branch and head offices of banks. Bangladesh Bank is well aware of the
environmental degradation situation and has already given time-to-time directions to all
scheduled banks. Commercial Banks are now required to ensure necessary measures to
protect environmental pollution while financing a new project or providing working capital to
the existing enterprises. Banks have been advised to facilitate their clients with utmost care
financing for installation of Effluent Treatment Plant (ETP) in the industrial units and to
finance in Solar Energy, Bio-gas, ETP and Hybrid Hoffman Kiln (HHK) in brick field under
refinance programme of Bangladesh Bank.
3.9 Objectives of Green Banking:
The broad objective of the green banks are avoiding waste and giving priority to environment
and society. Focusing on environment-friendly initiatives by providing innovative financial
and ensure sustainable development.
Increase goodwill or improve brand image by showing their commitment to save
and protect the environment
Reduce giving loans to certain environmentally harmful projects
Check the necessary environmentally due diligence factors before lending
a loan/investment
Make efficient and effective use of resources and channel financing in an
environment friendly manner;
Introducing new technology in banking operations that would not only
benefit customers but also increase the productivity of employees;
Reduce carbon foot print in all branches and head offices of all banks;
Create awareness amongst the stakeholders about environmental and
social responsibility enabling them to adopt environmentally friendly business
practices.
The Hoffmann kiln is a series of batch process kilns. Hofmann kilns are the most
common kiln used in production of bricks and some other ceramic products. Patented
by German Friedrich Hofmann for brick making in 1858, it was later used for limeburning, and was known as the Hoffmann continuous kiln.
Phase-I
Initiating In-house
Environment Management
Introducing Green finance
Creation of Climate Risk Fund
Introducing Green Marketing
Online Banking
Supporting
Employee Training,
Consumer Awareness and
Green Event
Disclosure and Reporting of
Green Banking Activities
Chart 1: Phase-I
(Source: Annual Report of Green Banking)
a) Policy Formulation and Governance
Bank shall formulate and adopt broad environmental or Green Banking policy and
strategy approved by their Board of Directors. A high powered Committee comprises of
directors from the Board in case of scheduled Bangladeshi Banks and a high powered
committee comprises Regional Chief of Global Office and members from the top
management including CEO in case of Foreign Banks should be responsible for
reviewing the banks environmental policies, strategies and program. Bank shall approve a
considerable fund in their annual budget allocation for green banking.
Banks are required to establish a separate Green Banking Unit or Cell having the
responsibility of designing, evaluating and administering related green banking issues of the
bank. A senior executive should be assigned with the responsibility of heading the unit.
The unit will report to the high powered committee time to time.
b) Incorporation of Environmental Risk in CRM
Banks shall comply with the instructions stipulated in the detailed guidelines on
Environmental Risk Management (ERM) in consideration of a part of the Green Banking
Policy. Bank shall incorporate Environmental and Climate Change Risk as part of the
existing credit risk methodology prescribed to assess a prospective borrower. This will
include integrating environmental risks in the checklists, audit guidelines and reporting
formats. All of this will help mainstream Environmental Risk that cover possible sources of
Environmental Risk such as Land use, Climate change related events (cyclone, drought),
animal diseases/pathogens such as avian influenza, solid waste including waste feed, animal
waste, carcasses, sediments, wastewater discharges, hazardous materials, etc will be
reviewed under Environmental Due Diligence (EDD) checklists.
c) Initiating In-house Environment Management
Banks shall prepare an inventory of the consumption of water, paper, electricity, energy etc.
by its offices and branches in different places. Then it should take measures to save
electricity, water and paper consumption. A 'Green Office Guide' or at least a set of general
instructions should be circulated to the employees for efficient use of electricity, water, paper
and reuse of equipment. In place of relying on printed documents, online communication
should be extensively used (where possible) for office management and make sure that the
printers are defaulted to duplex for double-side printing to save papers. Banks may apply
Eco font in printing to reduce use of ink, use scrap paper as notepads and avoid
disposable cups/glasses to become more eco- friendly. Installation of energy efficient
electronic equipment and automatic shutdown of computers, fans, lights, air coolers etc. will
help reducing electricity consumption. Energy saving bulbs should replace normal bulbs in
branches/offices of the banks. Banks should make plan to use solar energy at their premises
to save electricity. Bank should take steps to save energy from corporate business travel and
encourage employees to purchase energy efficient cars (that consume less fuel) can reduce
gas and petroleum consumption.
d) Introducing Green finance
Eco friendly business activities and energy efficient industries will be given preference in
financing by bank. Environmental infrastructure such as renewable energy project, clean
water supply project, wastewater treatment plant, solid & hazardous waste disposal plant,
bio-gas plant, bio-fertilizer plant should be encouraged and financed by bank. Consumer
loan programs may be applied for promoting environmental practices among clients.
e) Creation of Climate Risk Fund
Bank should finance the economic activities of the flood, cyclone and drought prone
areas at the regular interest rate without charging additional risk premium. However,
banks should assess their environmental risks for financing the sectors in different areas for
creating a Climate Change Risk Fund. This will be used in case of emergency. The bank
would ensure regular financing flows in these vulnerable areas and sectors. The fund
could be created as part of banks CSR expenses.
Green marketing is the marketing of products that are presumed to be environmentally safe.
Green marketing incorporates a broad range of activities, including product modification,
changes to the production process, packaging changes, as well as modifying
advertising. It refers to the process of selling products and/or services based on their
environmental benefits. Such a product or service may be environmentally friendly in itself
or produced and/or packaged in an environmentally friendly way.
Banks should use environmental causes for marketing their services to consumer. Green
marketing is expected to help awareness development among common people.
g) Online Banking
Online banking is the practice of making bank transactions or paying bills via the Internet on
a secure website of the respective bank that allows the customers to make deposits,
withdrawals and pay bills. Banks should give more emphasis to make the easiest way to help
environment by eliminating paper waste, saving gas and carbon emission, reducing printing
costs and postage expenses.
h)
Employee awareness development and training on environmental and social risk and the
relevant issues should be a continuous process as part of the bank's Human Recourse
Development. Awareness development among consumers and clients would be a continuous
job of a bank under its public relation department.
i) Disclosure and Reporting of Green Banking Activities
Banks shall report on the initiatives/practices to BB and disclose in their respective websites.
4.1.2. Phase-II:
The time lining for the actions to be taken under Phase-II should not exceed December
31, 2014.
A bank should develop and follow an environmental risk management manual or guidelines
in their assessment and monitoring of project and working capital loans. In addition to the
compliance of national regulation the bank may set internationally accepted higher
environmental standards. In this connection, Green initiatives by a group of banks will not
only be effective but will also offer competitive advantage. Bank alliances may prepare
standard and guidelines for themselves for improving Green Banking practices.
f) Programs to Educate Clients
Clients and business houses should be encouraged and influenced to comply with the
environmental regulations and undertake resource efficient and environmental activities.
Banks should introduce rigorous programs to educate clients.
g) Disclosure and Reporting of Green Banking Activities
Banks should start publishing independent Green Banking and Sustainability reports
showing past performances, current activities, and future initiatives. Updated and detailed
information about banks environmental activities and performances of major clients should
be disclosed.
4.1.3. Phase-III:
A system of Environmental Management should be in place in a bank before the
initiation of the activities of Phase-III. Banks are expected to address the whole ecosystem through environment friendly initiatives and introducing innovative products.
Standard environmental reporting with external verification should be part of the phase.
time lining for the actions to be taken under Phase-III should not exceed December 31,
2013.
Designing
and
introducing
innovative
products
Phase-III
Reporting
in
Standard
Format wit
h external
Verificatio
n
Chart 3: Phase-III
(Source: Annual Report of Green Banking)
a) Designing and Introducing Innovative Products
Alongside avoiding negative impacts on environment through banking activities, banks
are expected to introduce environment friendly innovative green products to address the core
environmental challenges of the country.
Printing Press.
9. Plastic & rubber goods (excluding PVC).
10. Restaurant.
11. Cartoon/box manufacturing/printing packaging.
12. Cinema Hall.
13. Dry-cleaning..
c) ORANGE-B Category
1. PVC items.
2. Artificial fiber (raw material). 3.
Glass factory.
4. Life saving drug (applicable to formulation only). 5.
Edible oil.
6. Tar.
7. Jute mill.
8. Hotel, multi-storied commercial & apartment building. 9.
Casting.
10. Aluminum products.
11. Glue (excluding animal glue).
12. Bricks/tiles.
13. Lime.
14. Plastic products.
15. Processing and bottling of drinking water and carbonated drinks.
16. Galvanizing.
17. Perfumes, cosmetics.
18. Flour (large).
19. Carbon rod.
20. Stone grinding, cutting, and polishing.
d) RED Category
1. Tannery.
2. Formaldehyde. 3.
Urea fertilizer. 4.
T.S.P. Fertilizer.
5. Chemical dyes, polish, varnish, enamel.
6. Power plant.
7. All mining projects (coal, limestone, hard rock, natural gas, mineral oil, etc.)
8. Cement.
9. Fuel oil refinery.
10. Artificial rubber.
11. Paper and pulp.
12. Sugar.
13. Distillery.
14. Fabric dying and chemical processing.
15. Caustic soda, potash.
16. Other alkalis.
6.1 Top Banks in Total Budget allocated for Green Banking for 2014:
In Million Taka
24016
16277.16
4501.5
St.Chart.
4000
2620
2600
Rupali IFIC
2166.6 2042.5
EXIM
1650
Trust
SIBL BASIC
Chart 5: Top Banks in Total Budget allocated for Green Banking for
2014(Source: Annexure A)
Interpretation: In case of budget allocation for Green Banking, Standard Chartered Bank
Limited ranks the highest of 41701.57 million taka because it has many branches in the urban
areas. Besides, the most prominent Eastern Bank Limited and AB Bank Limited together are
in very strong position as compared to other banks in the industry. Out of these ten banks
BASIC Bank scored the lowest point of 1650 million taka.
In Million Taka
24000
16265.91
4500
3000
2600
Rupali IFIC
EXIM
Trust
1200
Sonali
(Source: Annexure A)
Interpretation: In case of Budget allocated for Green Finance, Standard Chartered Bank
Limited is in the highest point and BASIC Bank ranks the lowest out of these ten banks.
These are the top ten banks in case of budget allocated for green finance in the banking
industry.
6.3 Top Banks in Budget allocated for Climate Risk Fund:
In Million Taka
430
SIBL
BASIC
400
Rupali
60
50
Prime
EXIM
50
20
15
15
10
IFIC
Eastern
In Million Taka
60
Rupali
Prime
50
EX
21.38
20
St.Chart. BASIC
19.3
One
10
9.9
6.5
Agrani
HSBC
Bank
Eastern Asia
(Source: Annexure A)
Interpretation: In case of budget allocation for Marketing, Training & Development, Rupali
Bank Limited is in the highest point and Eastern Bank Limited ranks the lowest out of these
ten banks.
In Million Taka
24934.3124009.80
16589.94
In Million Taka
6.6 Top Banks in Utilization of the allocated Budget for Climate Risk Fund:
31.25
10.00
9.65
9.00
3.66
1.00
0.84
0.22
0.02
Chart 10: Top Banks in Utilization of the allocated Budget for Climate Risk Fund
(Source: Annexure B)
Interpretation: In case of Utilization of the allocated Budget for Climate Risk Fund, Islami
Bank Bangladesh Limited is in the highest point and Standard Chartered Bank Limited ranks
the lowest out of these ten banks.
In Million Taka
5.7 Top Banks in Utilization of the allocated Budget for Marketing Training and
Development:
15.00
5.67
3.00
0.78
0.75
0.08
0.08
0.07
0.05
Chart 11: Top Banks in Utilization of the allocated Budget for Marketing Training and
Development
(Source: Annexure B)
Interpretation: In case of Utilization of the allocated Budget for Marketing Training and
Development, Islami Bank Bangladesh Limited is in the highest point and Trust Bank
Limited ranks the lowest out of these ten banks.
6.8 Top Banks in % of accounts facilitated with Internet Banking:
Eastern 23.00%
HSBC , 31.09%
Citi N.A.,
43.0
1%
Bank
Bank Asia,
100.00%
St. Chart. ,
52.36%
ori
Eastern SBI
Trust
EXIM ,
9.03%
St.
Chart.
,
77.22
%
Easter
n,
77.00
%
St.
Chart.
Eastern
Dhaka
DBBL
Bank
Asia
The City
BRAC
Dhaka, 51.55%
Eastern 896
AB Bank , 5153
Uttara , 908
IFIC , 1209
Interpretation: The pie chart shows that out of these top ten banks AB Bank Limited, Bank Asia
Limited, EXIM Bank Limited, Standard Chartered Bank Limited and IFIC Bank Limited all
are at the higher point that means their projects are rated against Environment Risk Rating. And
Eastern Bank Limited and BRAC Bank Limited are almost using Environment Risk Rating.
7. Overview of banking sector in Bangladesh:
Bangladesh is a third world country with an under developed banking system, particularly in
terms of the services and customer care provided by the government run banks. Recently the
private banks are trying to imitate the banking structure of the more developed countries, but
this attempt is often foiled by inexpert or politically motivated government policies executed
by the central bank of Bangladesh, Bangladesh Bank. The outcome is a banking system
fostering corruption and illegal monetary activities/laundering etc. by the politically powerful
and criminals, while at the same time making the attainment of services or the performance of
international transactions difficult for the ordinary citizens, students studying abroad or
through distance learning, general customers etc.
Virtually all banking services were concentrated in urban areas. The newly independent
government immediately designated the Dhaka branch of the State Bank of Pakistan as the
central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating
currency, controlling credit and monetary policy, and administering exchange control and the
official foreign exchange reserves. The Bangladesh government initially nationalized the
entire domestic banking system and proceeded to reorganize and rename the various banks.
Foreign-owned banks were permitted to continue doing business in Bangladesh. The
insurance business was also nationalized and became a source of potential investment funds.
Cooperative credit systems and postal savings offices handled service to small individual and
rural accounts. The new banking system succeeded in establishing reasonably efficient
procedures for managing credit and foreign exchange. The primary function of the credit
system throughout the 1970s was to finance trade and the public sector, which together
absorbed 75 percent of total advances.
The government's encouragement during the late 1970s and early 1980s of agricultural
development and private industry brought changes in lending strategies. Managed by the
Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and
fishermen dramatically expanded. The number of rural bank branches doubled between 1977
and 1985, to more than 3,330. Denationalization and private industrial growth led the
Bangladesh Bank and the World Bank to focus their lending on the emerging private
manufacturing sector. Scheduled bank advances to private agriculture, as a percentage of
sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987, while advances to
private manufacturing rose from 13 percent to 53 percent.
One major exception to the management problems of Bangladeshi banks was the Grameen
Bank, begun as a government project in 1976 and established in 1983 as an independent
bank. In the late 1980s, the bank continued to provide financial resources to the poor on
reasonable terms and to generate productive self-employment without external assistance. Its
customers were landless persons who took small loans for all types of economic activities,
including housing. About 70 percent of the borrowers were women, who were otherwise not
much represented in institutional finance. Collective rural enterprises also could borrow from
the Grameen Bank for investments in tube wells, rice and oil mills, and power looms and for
leasing land for joint cultivation. The average loan by the Grameen Bank in the mid-1980s
5
3
was around Tk 2,000 (US$65), and the maximum was just Tk 18,000 (for construction of a
tin-roof house). Repayment terms were 4 percent for rural housing and 8.5 percent for normal
lending operations.
The financial sector in Bangladesh is continuously evolving towards a more modern and
efficient system of finance which is supportive of greater investment and inclusive economic
growth. The financial system of Bangladesh consists of The Bangladesh Bank, scheduled
banks, non-bank financial institutions, micro finance institutions, insurance companies, cooperative banks, credit rating agencies and stock exchange.
Type of Bank
No.
Specialized Banks
7
30
9
54
3
4
Specialized Banks
1
2.
3.
4.
5.
6.
8.
10.
12.
14.
16.
18.
20.
22.
24.
26.
Mutual Trust
Bank Limited
9.
Limited
13.
Limited
17.
21.
25.
27.
Limited
28.
30.
5
5
3
4
5
6
7
Foreign
Citibank NA
HSBC
3
4
5
6
7
8
9
Bank Alfalah
Table 7: Foreign Commercial Banks (FCBs)
(Source: Wikipedia)
5
6
8.1
Direct Green
Finance
Indirect Green
Finance
In Million Taka
Specialized
Banks
Total
SCBs
PCBs
FCBs
3513.1
5623.74
881.28
1803.36
11821.48
2994.15
173187.17
76517.03
6401.7
259100.05
76517.03
3513.1
2994.1
5
SCBs
5623.7
4
PCBs
881.28
01.7
1803.36
6
4
FCBs
Speciali
zed
Banks
5
7
8.2
Bank Category
SCBs
PCBs
FCBs
Budget Allocation on Climate Risk
2145.35
Fund
415
1283.15
17
430.2
Budget Utilization on Climate Risk
258.89
Fund
24.61
219.7
14.58
0
Percentage of Budget Utilization
against Budget Allocation on Climate
Risk Fund
5.93% 17.12% 85.76%
0.00%
Table 9: Budget Allocation and Budget Utilization on Climate Risk Fund
(Source: Annexure F)
In Million Taka
Budget Utilization
1283.15
415
219.7 17
24.61
5.93
17.12
%
SCBs
PCBs
14.58 430.2
85.76
0.00
FCBs
Speciali
zed
Banks
Chart 16: Budget Allocation and Budget Utilization on Climate Risk Fund
(Source: Table 9)
Interpretation: Banks Climate Risk Fund covers their part of CSR activities or green
projects related to climate change risk. Banks have allocated 2145.35 million in 2012 as
climate risk fund. Banks have utilized taka 258.89 million in 2012 from their Climate Risk
Fund. Banks in general have not yet responded well in terms of utilizing Climate Risk
Fund. FCBs have utilized 85.76% maximum contribution against Budget allocation of
14.58. Out of 1283.15 million, PCBs have utilized 219.70 million (17.12%) whereas SCB
sand Specialized Banks have only 5.93% and 0% respectively.
5
8
8.3
In Million Taka
Budget Utilization
610
1.35
179.1
36.72
0.22
45.77
%
SCBs
PCBs
81.97
20.1
0.04
.06
19.23
0.20
FCBs
Speciali
zed
Banks
Chart 17: Budget Allocation and Budget Utilization on Climate Risk Fund
(Source: Table 10)
Interpretation: PCBs have given more concentration on Green Marketing, Training and
Development compared to SCBs, FCBs and Specialized Banks. In this case, PCBs have
utilized 81.97 million (45.77%) maximum contribution against its budget allocation. After
those FCBs have utilized 19.23%, SCBs have utilized 19.23% and Specialized Banks have
utilized 0.20%.
5
9
8.4
8.4.1
Bank Category
SCBs
PCBs
FCBs
Green Finance on ETP
118.81
687.89
162.8
Percentage of Green Finance on
ETP against Total Green Finance
on ETP
9%
51%
12%
Table 11: Percentage of Green Finance on ETP
(Source: Annexure F)
In Million Taka
Specialized
Banks
Total
387.02
1356.52
28%
100%
Specialized
Bank
s
28%
SCB
s9
%
SCBs
FCB
s
12%
PCBs
PCBs
51%
FCBs
Specialized Banks
In Million Taka
Bank Category
SCBs
PCBs
FCBs
2994.15
173187.17
76517.03
Green Finance on Projects
having ETP
Percentage of Green Finance
on Projects having ETP
2%
67%
30%
1%
against Total Green Finance
on Projects having ETP
Table 12: Percentage of Green Finance on Projects having ETP
(Source: Annexure F)
100%
6
0
Specialized
SCB
s1
%
FCBs
30%
SCBs
PCBs
PCBs
67%
FCBs
Specialized Banks
In Million Taka
Bank Category
SCBs
PCBs
FCBs
Green Finance on Bio-gas Plant
9.73
283.82
0
Percentage of Green Finance
on Bio-gas Plant against Total
1%
32%
0%
67%
Green Finance on Bio-gas
Plant
Table 13: Percentage of Green Finance on Bio-gas Plant
(Source: Annexure F)
100%
1%
PCBs 32%
s Specialized
0%
FCB
B
a
n
ks
67%
SCBs
PCB
s
FCB
s
Specialized Banks
In Million Taka
8.4.4
6
2
Specialize
d Banks
7%
Percentage of Green
Finance on
Solar/Renewable Energy
Plant
SCBs
27%
FCB
s
20%
SCBs
PCB
s
PCB
s
46%
FCB
s
Specialized Banks
In Million Taka
Bank Category
SCBs
PCBs
FCBs
Green Finance on Bio-fertilizer
Plant
0
0.4
0
0
Percentage of Green Finance on
Bio-fertilizer Plant against Total
0%
0%
0%
0%
Green Finance on Bio-fertilizer
Plant
Table 15: Percentage of Green Finance on Bio-fertilizer Plant
(Source: Annexure F)
0.4
100%
6
3
Specialize
Banks
0%
SCB
s
PCB
s
PCBs
100%
FCBs
Specialized Banks
In Million Taka
Bank Category
SCBs
PCBs
FCBs
Green Finance on HHK
538.71
841.96
0
Percentage of Green Finance on
29%
46%
0%
HHK against Total Green
Finance on HHK
Table 16: Percentage of Green Finance on HHK
(Source: Annexure F)
In Million Taka
Specialized Total
Banks
449.66
1830.33
25%
100%
6
4
SCB
s
29%
FCB
s
0%
SCBs
PCB
s
FCB
PCB
s
46%
s
Specialized Banks
In Million Taka
SCBs
PCBs
FCBs
Specialized
Banks
1457
22
Total No of Branches
3482
3378
75
No of Branches powered by Solar
21
169
2
Energy
Percentage of Branches facilitated
0.60 % 5.00% 2.67%
1.51%
powered by Solar Energy
Table17: No of Branches powered by Solar Energy
(Source: Annexure D)
Total
8392
214
9.78 %
6
5
3378
1457
169
21
0.60
5.00
%
SCBs
PCBs
75 2
22
2.67
1.51
FCBs
Speciali
zed
Banks
Bank Category
SCBs
PCBs
FCBs
No of ATM/ SME units by Solar
Energy
8
150
3
0
Percentage on number of ATM/ SME
units by Solar Energy against Total
No of ATM/ SME units by Solar
Energy
5%
93%
2%
0%
Table 18: Percentage on number of ATM/ SME units by Solar Energy
(Source: Annexure E)
Total
161
100%
6
6
FCB SCB
s2
s5
%
%
SCBs
PCBs
PCBs
93%
FCBs
Specialized Banks
Specialized Total
Banks
Bank Category
SCBs
PCBs
FCBs
3482
3378
75
1457
8392
Total No of Branches
No of Branches facilitated with Online
177
3116
75
77
Banking
3445
Percentage of Branches facilitated
5.08% 92.24% 100 %
5.28%
41.05%
with Online Banking
Table 19: No of Branches facilitated with Online Banking
(Source: Annexure D)
3378
3116
1457
177
75 75
5.08
92.24
%
SCBs
PCBs
77
100.00
5.28
FCBs
Speciali
zed
Banks
Bank Category
SCBs
PCBs
FCBs
Total No of accounts
27058490 25490410 418723
No of accounts facilitated with
21
666916 149541
Internet Banking
Percentage of accounts
facilitated with Internet
0.00%
2.62%
35.71%
0.00%
Banking
Table 20: No of Branches facilitated with Internet Banking
(Source: Annexure D)
1.22%
6
8
25490410
1395732
1 418723
149541
21
666916
0.00
2.62
SCBs
PCBs
35.71
0.00
FCBs
Speciali
zed
Banks
Specialized
Total
Banks
Bank Category
SCBs
PCBs
FCBs
Total No of accounts
27058490 25490410 418723 13957321 66924944
No of accounts facilitated with
2138437
1353
1971106 165978
0
SMS Banking
Percentage of accounts
3.20%
0.01
7.73
39.64
0.00
facilitated with SMS Banking
Table 21: No of accounts facilitated with SMS Banking
(Source: Annexure D)
6
9
25490410
1395732
135
3
197110
6
1 418723
165978
39.64
0.00
%
0.01
7.73
FCBs
SCBs
PCBs
Speciali
zed
Banks
Banks have started Environmental Risk Rating (EnvRR) since July 2011. Banks have done
environmental risk rating in 12088 projects in 2012. The numbers of projects rating in 2012
have increased more than three times higher than the previous year. 11165 projects
(disbursed amount is 703633.21) have been financed after rating in 2012.
Bank Category
No. of projects Rated
SCBs
130
PCBs
9974
FCBs
1486
Specialized Total
Banks
498
12088
4%
100%
7
0
Specialize
d Banks
4%
SCB
s
1%
SCBs
PCB
PCB
s
83%
s
FCB
s
Specialized Banks
In Million Taka
Bank Category
SCBs
PCBs
FCBs
No. of projects Rated Financed
128
9243
118
Percentage of No. of projects
Rated against Total No. of
1%
92%
1%
6%
projects Rated
Table 23: Percentage on number of projects Rated Financed
(Source: Annexure F)
100%
7
1
Specialize
d Banks
FCBs
6%
SCBs 1%
1
%
SCBs
PCBs
PCBs
92%
FCBs
Specialized Banks
In Million
Taka Chart 30: Percentage on number of projects Rated
financed
(Source: Table 23)
Interpretation: PCBs have given more concentration on number of Rated projects Financed
compared to SCBs, FCBs and Specialized Banks. In this case, PCBs alone have share of
92%. Out of 10101 million, Private Commercial Banks (PCBs) have utilized 9243
million (92%) maximum contribution whereas FCBs, Specialized Banks and SCBs have 1%,
6% and 1% respectively.
7
2
9.1
Conventional
PCBs
Bank Category
SCBs
ICBs
FCBs
Formulation and Approval of
Yes
Yes
Yes
Yes
Green Banking Policy
Table 24: Formulation and Approval of Green Banking Policy
(Source: Annexure-A)
Specialized
Banks
Yes
Yes
Yes
Yes
Yes
Conventional
PCBs
Bank Category
SCBs
ICBs
FCBs
Formation of Green Banking
Yes
Yes
Yes
Yes
Unit
Table 25: Formation of Green Banking Unit
(Source: Annexure-A)
Specialized
Banks
Yes
Formation of Green
Banking Unit
Formation
Yes
Yes
Yes
Yes
Bank Category
Budget allocation for Green
Finance
Average
SCBs
7185
1796.25
Conventional
PCBs
ICBs
54084.37
5675.87
2351.49
810.84
In Million Taka
Specialized
Banks
FCBs
41766.6
1800.3
4640.74
450.08
7
4
1796.25
2351.49
810.84
450.08
Bank Category
SCBs
Conventional
PCBs
ICBs
415
168
1115.15
In Million Taka
Specialized
Banks
FCBs
17.001
103.75
7.30
159.31
1.89
Table 27: Budget allocation for Climate Risk Fund
(Source: Annexure-A)
430.2
107.55
In Million Taka
103.75
7.30
1.89
Bank Category
Budget allocation for
Marketing, Training and
development
Average
SCBs
Conventional
PCBs
ICBs
119.10
610
In Million Taka
Specialized
Banks
FCBs
60.00
36.72
152.50
4.08
5.18
8.57
Table 28: Budget allocation for Marketing, Training and development
(Source: Annexure-A)
20.1
5.03
In Million Taka
5.18
8.57
5.03
4.08
Bank Category
Total Budget allocation for
Green Banking
Average
SCBs
Conventional
PCBs
ICBs
7185
52909.22
6851.02
In Million Taka
Specialized
Banks
FCBs
41766.6
1800.3
1796.25
2300.40
978.72
4640.74
Table 29: Total Budget allocation for Green Banking
(Source: Annexure-A)
450.08
In Million Taka
2300.40
978.72
450.075
Utilization of the budget allocation for 2012 (Green finance done against budget)
9.4.1
Bank Category
Utilization of the budget
allocation for Installation
of ETP
Average
SCBs
Conventional
PCBs
ICBs
118.81
261.54
426.35
In Million Taka
Specialized
Banks
FCBs
162.80
11.37
60.91
29.70
18.09
Table 30: Utilization of the budget allocation for Installation of ETP
(Source: Annexure-F)
387.02
96.76
In Million Taka
11.37
18.09
7
9
In Million Taka
748.54
Chart 38: Utilization of the budget allocation for Finance to projects having ETP
(Source: Table 31)
Interpretation: The above comparative graph among State-own Commercial Banks (SCBs),
Conventional Private Commercial Banks (Conventional PCBs), Islamic Commercial Banks
(ICBs) and Foreign Commercial Banks (FCBs), Specialized Banks on Green Finance Done
for projects having ETP shows that in average Islamic Commercial Banks and Foreign
Commercial Banks are almost similar and highest position because both banks have highest
utilization of budget in this sector where the State-own Commercial Banks have 748.54
million lowest utilization of fund for this project.
9.4.3
Bank Category
Utilization of the budget
allocation for Bio-gas Plant
Average
SCBs
9.73
Conventional
ICBs
PCBs
249.22
34.60
10.84
In Million Taka
Specialized
Banks
FCBs
0.00
606.32
4.94
2.43
0.00
Table 32: Utilization of the budget allocation for Bio-gas Plant
(Source: Annexure-F)
151.58
8
0
In Million Taka
2.43
10.84
4.94
0.00
62.35
79.8
Chart 40: Utilization of the budget allocation for Solar/Renewable Energy Plant
(Source: Table 33)
Interpretation: This another significant comparative diagram among State-own Commercial
Banks (SCBs), Conventional Private Commercial Banks (Conventional PCBs), Islamic
Commercial Banks (ICBs) and Foreign Commercial Banks (FCBs), Specialized Banks on
Utilization of the budget allocation for Solar/Renewable Energy Plant shows that in average
Conventional Private Commercial Banks have just started utilizing fund in this Solar/
Renewable energy plant sector where the State-own Commercial Banks have utilized highest
246.24 million funds in this sector. Here Islamic Commercial Banks are doing better than that
of other types of banks in this sector.
9.4.5
Bank Category
Utilization of the budget
allocation for Bio-Fertilizer
Plant
Average
SCBs
0.00
Conventional
PCBs
0.40
ICBs
In Million Taka
Specialized
Banks
FCBs
0.00
0.00
0.02
0.00
0.00
0.00
Table 34: Utilization of the budget allocation for Bio-Fertilizer Plant
(Source: Annexure-F)
0.00
0.00
8
2
In Million Taka
0.00
0.00
0.00
0.00
Bank Category
Utilization of the budget
allocation for HHK
Average
SCBs
538.71
Conventional
ICBs
PCBs
821.46
20.5
In Million Taka
Specialized
Banks
FCBs
0.00
35.72
2.93
134.68
0.00
Table 35: Utilization of the budget allocation for HHK
(Source: Annexure-F)
449.66
112.42
In Million Taka
112.42
35.72
2.93
0.00
Bank Category
Utilization of the budget
allocation for others
Average
SCBs
1860.91
Conventional
ICBs
PCBs
1183.66
906.19
In Million Taka
Specialized
Banks
FCBs
0.00
51.46
129.46
465.23
0.00
Table 36: Utilization of the budget allocation for others
(Source: Annexure-F)
110.97
27.74
In Million Taka
51.46
129.46
0.00
27.74
In Million Taka
135.73
Chart 44: Total Green Finance against Budget (without Projects having ETP)
(Source: Table 37)
Interpretation: The above comparative graph among State-own Commercial Banks (SCBs),
Conventional Private Commercial Banks (Conventional PCBs), Islamic Commercial Banks
(ICBs) and Foreign Commercial Banks (FCBs), Specialized Banks is about the total green
finance done against budget. Here, we see that in average State-own Commercial Banks have
878.28 million taka for green finances where Islamic Commercial Banks have 357.42 million
and Specialized Banks have 450.84 million for green finance. That means the Islamic Banks
have huge green finances than that of conventional bank. The State-own Commercial Banks
have highest 878.28 million ahead of four types of banks.
9.5
Bank Category
Budget Utilization for
Climate Risk Fund
Average
SCBs
24.61
6.15
Conventional
ICBs
PCBs
10.36
209.34
0.45
29.91
In Million Taka
Specialized
Banks
FCBs
14.58
0
1.62
0.00
8
6
In Million Taka
6.15
1.62
0.45
0.00
Bank Category
Budget Utilization for
Marketing, Training and
Development
Average
SCBs
Conventional
PCBs
ICBs
In Million Taka
Specialized
Banks
FCBs
1.35
9.49
72.48
7.06
0.04
0.34
0.41
10.35
0.78
0.01
In Million Taka
0.34
0.78
0.41
0.01
Bank Category
Number of branches powered
by solar energy
Average
68
FCBs
2
Specialized
Banks
22
10
SCBs
21
Conventional
PCBs
38.62
ICBs
5
2
Bank Category
Number of ATM/ SME units
powered by solar energy
Average
FCBs
2
Specialized
Banks
22
SCBs
21
Conventional
PCBs
34.62
ICBs
5
2
Bank Category
Number of ATMs (Own)
Average
316
FCBs
4509
Specialized
Banks
7
45
501
SCBs
67
Conventional
PCBs
4509.00
ICBs
17
196
17
Bank Category
Number of ATMs (Share)
Average
SCBs
4244
1061
Conventional
ICBs
PCBs
27170.00
13238
1181
1891
FCBs
7700
Specialized
Banks
925
856
231
1181
856
231
Bank Category
Number of branches with
online banking facility
Average
751
FCBs
75
Specialized
Banks
77
107
19
SCBs
177
Conventional
PCBs
2365.00
ICBs
44
103
103
44
19
Bank Category
Number of accounts
facilitated with online
banking facility
Average
751
FCBs
149541
Specialized
Banks
0
107
16616
SCBs
21
Conventional
PCBs
666165.00
ICBs
28964
107
Bank Category
Number of accounts
facilitated with SMS banking
facility
Average
SCBs
1353
338
Conventional
ICBs
PCBs
1447186.00 523920
62921
74846
FCBs
165978
Specialized
Banks
0
18442
18442
338
SCBs
0
Conventional
ICBs PCBs
FCBs
Speciali
zed
Banks
Bank Category
SCBs
143.00
Average
36
Conventional
ICBs
PCBs
12657.00
2420.00
550
346
FCBs
Specialized
Banks
1793.00
631.00
199
158
9
5
Findings:
From the overall analysis and discussions, all these 5 types of banks - State-own
Commercial Banks (SCBs), Conventional Private Commercial Banks (PCBs), Islamic
Commercial Banks (ICBs) Foreign Commercial Banks (FCBs) and Specialized Banks
formulated and approved of Green Banking Policy and Green Banking Unit.
From the overall analysis, we can easily say that Islamic Commercial Banks
(ICBs) are performing best than State-own Commercial Banks (SCBs),
Conventional Private Commercial Banks (PCBs), Foreign Commercial Banks (FCBs)
and Specialized Banks.
From the result of analysis, it appears to us that Islamic Commercial Banks rank
top due getting highest score in 7 parameters and got second high score in 9
parameters out of the 24 parameters of analysis.
In 1 parameter that is Green finance done against budget for Bio-Fertilizer plant, out of
these 24 parameters Islamic Commercial Banks (ICBs), State-own Commercial
Banks (SCBs), Foreign Commercial Banks (FCBs) and Specialized Banks all these
four types of banks show zero or nil performance except Conventional Private
Commercial Banks (PCBs).
Conventional Private Commercial Banks have become first in only 5 parameters and
second in 7 parameters out of 24 parameters. Thats why we can say that
Conventional Private Commercial Banks are severely lagged behind than that of
Islamic Commercial Banks.
It is a matter of great happiness that Islamic Commercial Banks have 100%
achievements in some parameters. Islamic banks are contributing to the
environment greatly by financing solar energy and ETP projects.
In case of budget allocation for green finance, FCBs have played a significant
role by allocating 4640.74 million taka in 2012. In case of climate risk fund, ICBs
have allocated 159.31 million taka highest in average whereas FCBs have 17.001
million taka lowest allocation of funds in CRF.
Islamic Commercial Banks are using modern technology in the service delivery
process through internet banking, online banking, ATMs and SMS/Phone banking.
It has a great importance in the environment because if the banks use the
technological advantages, there will be a very small pressure on paper. Thereby
there will be less pressure on trees. So, Islamic Commercial Banks are less paper
Bangladesh Bank should be stricter in applying the rules. Bangladesh Bank has made
three phases to implement Green Banking in Bangladesh of which two phases have
already been completed. But it is a matter of great sorrow that all banks did not
comply with this. Side by side, Bangladesh bank should be empowered and
independent for making right decision. If they have to work under political
pressure, their efficiency and effectiveness will be hampered. Bangladesh bank
must monitor the adherence of green banking guidelines by banks. Immediate
concentration has to be imposed on sector wise lending policies and procedures.
For Bangladesh Government:
Since climate change has a very negative impact on Bangladesh Specially, our
government should be more careful about. Climatologists suggest that the lower part
of Bangladesh can undergo as a result of global warming. Thats why Bangladesh
Government can take some necessary steps for it. Firstly, it can allocate some
budget from the Annual Development Program (ADP) for green Bangladesh. It can
empower the environment related ministry and ministers to do something for making
our country greener. Government should carefully monitor and supervise the green
banking practices in Bangladesh. Government encourages the general people about
green banking awareness through the electronic and print media.
Conclusion:
It goes without saying that Islamic banks are performing well than that of conventional
banks for making the environment livable for us. Banks already have completed the
second phase, having an implementation deadline (December 31, 2012) for Green
Banking activities. Banks will need to concentrate on Sector Specific Environmental
Policies. They need to formulate strategies to design specific policies for different
environmental sensitive sectors. Banks must take climate change and environmental
consideration as a prior commitment in all their activities. They must be proactive
in building internal resources and capacity to identify, appraise and close
Sustainable Energy Finance (SEF) deals. It is expected that the banking sector will
play an intermediary role between economic development and environmental
protection and lead from the front towards a sustainable future of Bangladesh. Green
banks and environmentally responsible banks do not only improve their own
standards but also affect socially responsible behavior of other business. Banks
will always take necessary initiatives to be a green bank and will discharge its
responsibility towards environment. PCBs, FCBs have adopted green banking
guideline and financed some of green banking based projects on the other hand SCBs