Assignment on green banking by anis....6.8.16 1

Assignment On:
Green Banking of Bangladesh
Course Title:Banking and Insurance
Course Code: FIN-334
Preferred To:
Nusrat Jahan
Senior Lecturer of
School of Business Administration.
Uttara University
Preperred By:
Name Id Batch Section
Md. Anisur Rahman M21331111043 32nd A
Md. Tarikul Islam M21331111006 32nd A
Md. Shofiqur Rahman M21331111037 32nd A
Md. Ataur Rahman M21331111046 32nd A
Farjana Akhtar 32nd A

Abstract
Banks usually provide dedicated public services for profits. It is believed that profit should not be
earned at the expense of the world's most pressing environmental problems. Thus the concept of
green banking is evolved in response to the global initiative to save environment. It is a kind of
welfare banking for the society at large, it responses to be green in daily operations and financing
of nature conservation projects. The present paper aims to highlight the green banking road map
in Bangladesh and the status of its implementation. Further, an attempt has been made to explore
activities of commercial banks in comparison with global green banking initiatives. The study
utilized secondary data available from related websites, published reports and articles. The study
concluded that Bangladesh is far behind their counterparts from the developed countries. But the
general picture presents a transition to green banking in a consistent manner for most banks. By
taking care of its infrastructure development and accelerating its existing green movements, banks
can ensure sustainability for itself and greener world for communities.

Introduction
The word „Green Banking‟ is very common concept in the world. Global warming is a great issue
in protection of hygienic society. There is high possibility of playing significant role of Green
Banking in the global warming issue. The green banking concept is evolved in western countries
and now is practiced in most of the countries in the world. It indicates endorsing environment-
friendly practices and reducing carbon footprint from banking activities. Green banking is not just
another corporate social responsibility activity; it is all about going beyond to keep the world
livable without any significant damage.
Bangladesh is, a low carbon emitting country even among the developing countries, likely to be
one of the worst sufferers of Global Warming. It is experienced that climate change has already
enhanced the frequency and intensity of floods, droughts and cyclones in Bangladesh, and would
have negative impact on water resources, land, crop agriculture and food security, fisheries and
livestock, forestry and bio-diversity, and human health as well.
Green banking that considers all the social and environmental factors is also called ethical
banking. The main objective of green Banking is to ensure the use of organizational resources in
favor of the environment and society. Green banking as a concept is proactive and smart way of
thinking with a vision for future sustainability of our only Spaceship earth. (Richard Buckminster
Fuller, 16 November 2012). It evaluates all the factors before giving the loan whether the project
is environment-friendly and has any implication on the future people and planet. Green finance as
a branch of green banking makes significant contribution to the transition to resource efficient and
low carbon industries i.e. green industry and green economy in general. Green banking is a
component of the global initiative by a group of stakeholders to put aside environment. Green
banking or ethically responsible banks do not only advance their own initiatives but also affect
socially responsible behavior of other business. Environmental concern is at the center of Green
Banking (GB) policies and strategies. Considering the importance of green banking, Bangladesh
Bank (BB), the central bank of the country, has undertaken a number of initiatives. The broad
objective of the paper is to assess the achievements of Bangladesh in eco-friendly banking., market
imperfection and ignorant customer group are the major hindrances in doing GB.

Objectives of the study
The major objective of the study is to analyze the prospects of green banking in Bangladesh. But
the specific objectives of the study are to promote green banking among beneficiaries and in the
banking sector. In particular, it is aimed to –
1. To analyze the green banking practices in Bangladesh;
2. To justify the prospects of green banking practices in Bangladesh;
3. To provide some suggestions in this regards.
Methodology of the study
Methodology & limitations of the study: The study is conducted only based of secondary data and
these data are collected from annual report of, Dutch-Bangla Bank limited (DBBL), Prime Bank
Limited, Islami Bank Bangladesh ltd (IBBL), Shajalal Islami Bank ltd, Pubali Bank ltd, Trust Bank
ltd, Eastern Bank Ltd, United Commercial bank ltd(UCBL). The Banks are selected on the basis
of random sampling. In addition to this, the data is also collected through company’s corporate
profile, daily newspaper, different journals & articles, bank’s websites and Bangladesh bank’s
websites. The data are analyzed in aspect of practices and problems of green banking. Actually we
did not interview of company executives for conducting the study. The findings of the study are
reliable as the authentic sources of data. The major limitation of the study is that no primary data
is involved in the study.
Rationale of the Study:
In the age of global warming and climate change, delivering right services are not enough for
clients but also practicing of green banking concept for friendly environmental issue as the
corporate social responsibility is inevitable (CSR) to the target customer or clients and for sinking
of global warming.

Review of related literature
Review of related literature: Atiur Rahman (2010) in his paper focused on the present monetary
and credit policy of Bangladesh Bank 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.
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 practice 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 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.
Green Banking is also significant issue in recent times. While the banking industry is undergoing
computerization, networking and offering of on-line banking is naturally gaining momentum
[Mohmed Aminul Islam (2010)].

Background of the study
What is Green banking?
Green Banking defined as promoting environmental-friendly practices and reducing your carbon
footprint from your banking activities. Green banking thus involves a two-pronged approach.
Firstly, green banking focuses on the green transformation of internal operations of all banks. It
means all the banks should adopt appropriate ways of utilizing renewable energy, automation and
other measures to minimize carbon footprint from banking activities. Secondly, all banks should
adopt environmentally responsible financing; weighting up environmental risks of project, before
making financing decisions; and in particular supporting and fostering growth of upcoming
„green‟ initiatives and projects. Generally Green banking coverage includes: Sustainable banking,
Ethical banking, Green mortgages, Green loans, Green credit cards, Green savings accounts, Green
checking accounts, Green money market accounts, Mobile banking, online banking, Remote
deposit, Waste Management, Roof Gardening, and Green Financing
Reasons of practicing of Green Banking:
The broad objective of the green banks is avoiding waste and giving priority to environment and
society. Focusing on environment-friendly initiatives by providing innovative financial and ensure
sustainable development
 Using organizational resources with responsibility.
 Keeping the world livable for a long period of time.
 To minimize paper works as much as possible inside and outside the bank.
 To achieve cost and time efficiency.

Analysis and Findings of the study
Bangladesh Bank selected ten commercial banks in Bangladesh on the basis of CAMEL„S rating
and Risk Based Capital Adequacy (RBCA) measurement that are executing green banking
practices. It is the first time of disclosing the green Banking report by central bank. Bangladesh
bank also emphasizes on the environmental issue for launching new branch as well as selecting
these banks such as Bank Asia ltd, Dutch Bangla Bank limited (DBBL), Eastern Bank ltd (EBL),
Islami Bank Bangladesh ltd, Mutual trust bank ltd, Prime bank ltd, Pubali Bank ltd, Standard
Chartered bank, Shahajalal Islami bank ltd and Trust Bank ltd considering the green banking
information till first quarter of 2012. The Bangladesh bank authority considered the following
major activities under the green banking for getting the scenario of that;
 Green banking policy
 Green Banking unit
 Allotment of fund in green banking
 Funds for green financing
 Mobile banking
 On line banking
 Internet banking
 Green banking budget
 Environmental risk rating
 Effluent Treatment Plant (ETP)
 ETP related project
The above mentioned banks allotted Tk. 525 crore for green banking and Tk. 505 crore was
provided for green financing among that fund. The 40 out of 47 nationalized and non-nationalized
commercial banks were established green banking unit. The 41 commercial banks were formulated
green banking policies.

Fund allocation of Green Banking
: Banks are required to allocate a considerable amount for green banking in their annual budgets,
which will include (a) Budget for green Finance (b) Budget for Climate Risk Fund and (c) Budget
for marketing & capacity building for green banking. 35 Banks have allocated Tk. 23,018.36
million in their annual budget for 2012. On an average, a bank allocated Tk. 657.67 million for
green banking in 2012.
Green Finance:
For 2012 banks have allocated Tk.20, 034.59 million for green finance of which Tk. 3273.69
million has been utilized during January- September 2012. From the table we can realize that
private commercial banks allocated the funds for green finance rather than the state - owned
commercial bank. We also realized that utilization of allocation funds in private commercial banks
is more than other state owned commercial banks. State development banks more used its allocated
funds
Online Banking
Access to Online Banking services for the customers is expanding rapidly along with increase in
the number of branches with online coverage and accounts facilitated with internet banking. The
Online Banking scenario looks promising, wherein 3,226 out of 8,199 branches (39.35%) are
equipped with online banking services. 90.73% of the total branches of private commercial banks
(PCBs) have been brought under online banking coverage. 4.84% of the total branches of state
commercial banks(SCBs) have been brought under online banking coverage. The SCBs need to
go a long way in the arena of green banking.
Mobile Banking:
With fast expanding mobile telephone and great enthusiasm of the banks in offering financial
services through mobile phones, Bangladesh Bank issued guidelines on mobile financial services
in 2011. 23 Banks have been given license to provide mobile financial services (MFS) of which
14 banks have already started their operations. These banks are presently providing MFS to around
1.5 million customers; average transaction volume is around Taka 330 million per day. The
average rate of growth of customer base in mobile banking is currently 15% per month. ATM
services of Banks: Most of the banks have been offering 24 hours banking services through their
countrywide ATM booths. Now 4,332 ATM booths are operating in Bangladesh. Dutch - Bangla
Bank is taking the leading position with installation of 2,170 ATM booths.

Banks’ in house Green activities:
Use of papers on both sides for internal consumption
Introduction of e- statement for customers in lieu of paper statement.
Use of online communications in the best possible manner.
Using more daylight instead of electric lights and proper ventilations in lieu of using air
conditioning.
Using energy saving bulbs.
Video /audio conferencing in lieu of physical travel.
Conversion of bank’s vehicles into CNG and use of energy efficient electronic
equipment.
Efficient use of printer cartridges, photocopy toner, office stationary etc.
Sharing electronic files, voice mail, and e-mail instead of paper memos.
Common use of table stationeries instead of individual use.
Specific Findings
 45 banks have formulated policy for green banking.
 46 banks have formed a Green Banking unit.
 41 Banks have introduced a Green Office Guide.
 Environmental risk rating has been done for 13,779 projects.
 13,833 risk rated prefects have been financed.
 212 Branches and 150 SME Units/ATM booths are powered by solar energy.
 37 banks are fully automated.
 3226 branches have been facilitated with online coverage.

Recommendations & Suggestions:
 Government should carefully monitor and supervise the green banking practices in
Bangladesh.
 Bangladesh bank must monitor the adherence of green banking guidelines by the
commercial and noncommercial banks.
 Government encourages the general people about green banking awareness through the
electronic and print media.
 Coordination among concerned authorities.
 Speeding up awareness and effective capacity building.
 Immediate concentration on sectoral lending policies and procedures.
 Shifting of different categories of industry (such as, garments, textiles, and tannery) to a
proper location.
 Awareness of top management.
 Encouraging borrowers to go green.
 Need to apply green banking and use environmental risk management (ERM) guideline in
efficient manner.
 Develop a culture within the organization based on environmental governance.
 Replicate global as well as local best practices.
 Share Knowledge and technical know-how with peer groups..
 Apply quantitative approach for environmental risk rating.
 Develop a database for technical assistance/issues.

Conclusion:
Bangladesh is one of the most climate change vulnerable countries to climate change in the world.
From the overall discussion, it can be said that green banking practices in Bangladesh are not at a
satisfactory level. In line with global development and response to the global warming, Green
banking plays significant roles. Government as well as every bank should take initiatives in respect
of green banking practices for protecting our environment. Bangladesh bank will emphasize with
significance of green banking activities/practices of a bank while according permission for opening
new bank branches and approval for launching new bank. Government should also encourage the
general people about the green banking practices. The central bank should monitor or supervise
commercial banks whether they are practicing green banking or not. So, every bank has to
participate and contribute to green banking practices in today’s extreme national and global
banking competition.

References
1) Atiur Rahman, “Financial Services at People‟s Doorstep”, Governor, Bangladesh Bank,
2010.
2) Suresh Chandra Bihari, “Green Banking – Socially Responsible Banking in India”, The
India Banker, Vol. VI, No.1, 2011. .
3) Green Banking Policy of BASIC bank ltd, Bangladesh, Head Office, Dhaka,
http://www.basicbanklimited.com/Green_Banking.php
4) Mohmed Aminul Islam, “Green Banking: Future Important Issue for Banking Industry”,
Financial Express, Regd No. DA 1589, Dhaka, Vol.20, No.381, 2010.
5) Bangladesh Bank (2010) Review of Corporate Social Responsibility (CSR) Initiatives in
Banks 2008 & 2009. Dhaka, Bangladesh Bank.
6) http://www.bangladesh-bank.org
7) http://www.ucbl.com
8) http: //www.trustbank.com.bd
9) http://www.primebank.com.bd
10) http://www.dutchbanglabank.com [12]
11) http://www.islamibankbd.com
12) http://www.ebl.com.bd
13) http: //www.shahjalalbank.com.bd
14) http://pubalibangla.com

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