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Socia
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Green
Banking
Report |
1

INTERNSHIP REPORT
ON
COMPARATIVE ANALYSIS OF

GREEN BANKING INITIATIVES

OF
PRIME BANK LIMITED

Green Banking Report | 2

LETTER OF TRANSMITTAL
August 20, 2013
Suborna Barua
Lecturer
Department of International Business
University of Dhaka
Subject: Submission of the Internship Report.
Honorable Sir,
It is my pleasure to submit my internship report on Green Banking Practices of Prime
Bank Limited. This report is a result of the Internship Program that I have accomplished for
a specified 15 days in the Green Banking Unit at the Head Office of Prime Bank Limited.
I have tried my level best to make this report comprehensive and informative as possible
within the time allowed.
I hope this report will meet the standards of your judgment.
Sincerely Yours,

Asif Al Nahian
Kazi Asif Al Nahian
ID: 02-200935
th

BBA 15 Batch
Department of International Business
University of Dhaka

Green Banking Report

|3

LETTER OF AUTHORIZATION
This is to certify that the internship report on Green Banking Practices of Prime Bank
Limited as a part to fulfill the requirement of Bachelor of Business Administration, (B.B.A)
degree from the Department of International Business, University of Dhaka has been carried
th

out by Kazi Asif Al Nahian, student ID-35, a student of BBA 15 Batch under my
supervision. No part of the internship report has been submitted for any degree diploma, title,
or recognition before.

Date:
Suborna Barua
Lecturer
Department of International Business
University of Dhaka

Green Banking
Report | 4

ACKNOWLEDGEME
NTS
First of all I would like to express my deepest gratitude to the almighty for giving me the
composure to finish this work.
Internship program provides an opportunity to experience the real world scenario and helps
to develop own judgments. And doing my internship on the Green Banking Practices of
Prime Bank Limited was a great experience for me.
Here I would like to express my heartiest gratitude to my Intern Supervisor Mr. Subarna
Barua for his sincere cooperation and suggestions to complete my job.
I would like to express my gratitude to the Head of Green Banking Cell of Prime Bank
Limited for giving me a chance to work as an intern in his department.
Finally I am really grateful to my teachers and to the officials of Bangladesh Bank for giving
me such an opportunity to work in this project.

Kazi Asif Al Nahian

ID: 02-200935
th

BBA 15 Batch
Department of International Business
University of Dhaka

Green Banking Report | 5

ACKNOWLEDGEME
NTS
The concept Green Banking 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. 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.
Bangladesh Bank is the first central bank in the world that has taken real initiatives to
facilitate the way of Green Banking practice. With some specific guidelines and legal
frameworks the central bank of Bangladesh has been urging all the commercial banks in
Bangladesh to develop their own Green Banking Policies.
This paper is an attempt to analyze the Green Banking Practices of a renowned private
commercial bank in Bangladesh, the Prime Bank Limited and identifying the efficiency or
inefficiency of the initiatives taken by the bank regarding Green Banking.

Green Banking
Report | 6

TABLE OF
CONTENT
Topics

Page

1. Chapter-One
1.1 Introduction

1.2 Origin of the Study

10

1.3 Objective of the Study

1.4 Methodology of the Study

10
11

1.5 Limitations of the Study

11

2. Chapter-Two
2.1 About Prime Bank

3. Chapter-Three
3.1 About Green Banking
3.2 Evaluation of the Idea of Green Banking
3.3 Components of Green Banking
3.4 Challenges towards Green Banking
3.5 International Initiatives of Green Banking
3.6 Green Banking Products & Services in the World
3.7 Green Banking Practices in Bangladesh

13
15
16-17
17
18
19-20
21-27
28-32

4. Chapter-Four
4.1 Green Banking in Prime Bank Limited

34

4.2 Concept of Management About Green Banking

35

4.3 Formal Document of Green Banking

36
37

4.4 Reasons for Introducing Green Banking

4.5 Green Banking Components of Prime Bank Limited

38-40

4.6 Management Framework of Green Banking in Prime Bank

41-42

4.7 Institutional Arrangement for Green Banking

4.8 Dimensions & Coverage of Green Banking Activities

43-47
48

4.9 Green Banking Best Practices

49-50

4.10 Policy Framework of Green Banking Activities

51-52

5. Recommendations

53

6. Conclusions
7. References

54
55

Green Banking Report | 7

CHAPT
ER
ONE

Green Banking
Report | 8

1.1
INTRODUCTION
An internship program is a very good approach to co-relate the practical
work experience with the theoretical knowledge because it provides an
individual the great opportunity to work in an organization with some
specific objectives. As a result it bears great importance in case of
business graduates.
As an intern it was a great opportunity for me to work in one of the
reputed private commercial banks of Bangladesh, the Prime Bank Limited.
During this period I had the opportunity to work in the Green Banking Unit
at the Head Office of Prime Bank Limited.
Green Banking or Sustainable Banking as a concept is not very new
around the world. Global warming, unusual weather pattern, rising
greenhouse gas etc. has always urged the business world to take some
responsibilities in safeguarding the planet. Consequently environment
friendly banking practices emerged in many western countries.
However, in our country, the central bank of Bangladesh, Bangladesh
Bank has taken the real initiative to make the financial industry more
environment friendly and responsible by formulating a detail Green
Banking Policy Guideline in February 27, 2011.
Now, the main objective of my internship program was to evaluate the
Green Banking practices of the Prime Bank Limited and this report is
basically a result of experience in the Green Banking Unit of the Prime
Bank Limited.

Green Banking
Report | 9

1.2
REPORT

ORIGIN OF THE

As a requirement of the completion of the Bachelor of Business

Administration degree under the Faculty of Business Study at University of
Dhaka, I was assigned to do my internship at the Head Office of Prime
Bank Limited for a specified period of 15 working days from May 30 to
June 19, 2013 as an intern. During this period I worked at the Green
Banking Unit under the Risk Management Division of the Head Office of
Prime Bank Limited. The objective of my internship program was to
understand the different aspects of Green Banking activities of Prime
Bank Limited. This report is a formal documentation of this internship
program.

1.2
REPORT

OBJECTIVE OF THE

The objective of this report can be viewed from two perspectives.

1) General Objective
2) Specific Objective
General Objective: This internship report is primarily prepared as a
requirement of the completion of Bachelor of Business Administration
degree under the Faculty of Business Studies at University of Dhaka.
Specific Objective: The specific objectives of this report area) To find the historical evaluation of Green Banking at Prime Bank
Limited.
b) To find the reasons for introducing Green Banking.
c) To find the concept of the institutions management about Green
Banking.
d) To analyze the components of Green Banking & their effectiveness of
Prime Bank Limited.
e) And finally to identify the major areas of efficiency or inefficiency of
the bank regarding its Green Banking initiatives.

Green Banking
Report | 10

1.3
STUDY

METHODOLOGY OF THE

The objectivity of any study depends largely on how methodologically it is

done. For the purpose of this report I have used both qualitative and
quantitative information to give it a clear judgment opportunity.
All the information used in this report are from two major sources. These
are:
Primary Sources:

Face-to-face interview with the concerned employees of the bank.

Conversations with my classmates.

Practical work experience in the Green Banking Unit under the Risk
Management Division of the bank.

Secondary Sources:

Quarterly Reports of Prime Bank Limited about Green Banking.

Annual Report of the Prime Bank Limited 2012.
Reports published by Bangladesh Bank.
Some national & international journals about Green Banking.

1.4
STUDY

LIMITATIONS OF THE

Almost every research work has to face some limitations in its completion.
Limitations of a study are those issues that if analyzed could be more
helpful for the study. This internship report is not also out of limitations.
For the purpose of acquiring data to prepare this report I faced some
constraints that are listed below:
Lack of Published Materials: No kind of published materials was
provided to me during my internship period. The division only allowed me
to review their materials. As a result this report is in lack of some specific
reference papers in the appendix part.
Time Constraint: Covering the entire Green Banking performance of the
bank was a difficult task within the time allowed for the internship
program.
Lack of Experience: Preparing a formal document like an internship
report requires some prior experience in this field. I have tried my level
best to reduce the distortion or biasness of information that I have used in
this report.

Green Banking Report | 11

CHAPT
ER
TW
O

Green Banking Report

| 12

2
LIMITED

ABOUT PRIME BANK

Prime Bank is one of the reputed private commercial banks working in

th

Bangladesh. The bank started its journey on 17 April 1995 by a group of

successful local entrepreneurs. Within a very short span of time Prime
Bank has made significant progress in the industry and has been graded
as top class bank in the internationally accepted CAMELS rating.
At present the bank has 130 branches operating in different areas in
Bangladesh. As of annual report 2012, total paid-up capital of Prime Bank
is Tk. 9,358 million.
Mission Statement
To build Prime Bank Limited into an efficient, market driven, customer
focused institution with good corporate governance structure. Continuous
improvement of our business policies, procedure and efficiency through
integration of technology at all levels.
Vision
To be the best Private Commercial Bank in Bangladesh in terms of
eficiency, capital adequacy, asset quality, sound management and
profitability having strong liquidity.
Credit Rating
CRISL reaffirmed long term rating of PBL to AA+ and short term rating
to ST-1 based on financials up to December 31, 2011.

Green Banking
Report | 13

CHAPT
ER
THREE

Green Banking Report

| 14

3.1
BANKING

ABOUT GREEN

Global warming, which is one of the most burning & discussed issues, has
the worst impact on the climate of the planet as a whole. Due to unusual
weather pattern, rising greenhouse gas, declining air quality etc. society
demands that business also take responsibility in safeguarding the planet.
Green Banking is one of the revolutionary concepts in todays business
world which basically refers to as sustainable banking, socially responsible
banking or ethical banking that endorse environment-friendly practices
and reducing carbon footprint from banking activities.
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. So in a very specific wayGreen
Banking
means
banking
practices
that
foster
environmentally responsible financing practices as well as using
environmentally sustainable internal processes.
Morshed, Rubayat and Singha (n.d., p. 11) explained that Green Banking
can be viewed from two different approaches as follows:

Transformation of Internal Operation:

Firstly, banks can adopt
appropriate ways to utilize
renewable energy sources,
automation and other measures
to minimize carbon usage in
banking activities.
Environmentally Responsible
Financing Policy: Secondly,
banks should consider
environmental issues with utmost
importance while financing or
investing in project.

Green Banking Report | 15

3.2
EVALUATION OF THE IDEA OF
GREEN BANKING
Although the theoretical idea of Green Banking is not very old; some
practices can be traced from the ancient banking & financial practices.
During the 16

th

century religious ethics, the environment and local

community provided the main framework for both life and economy and
therefore influence businesses and the financial sector as well. Besides,
during the 19

th

century credit unions and financial cooperatives worked on

the criteria that were used as sustainability criteria later. (Weber n.d., p. 2)

Following the political

disturbance in the 1960s and
first discussion about
environmental and social
responsibilities of business,
the first ethical banks were
founded in the 1970s. They
wanted to re-integrate
ethics into the financial
business. (Weber n.d. p. 2)

These banks used some of the principles of the credit unions and cooperatives but added an ethical perspective to their business. Because of
higher energy and waste management prices it was worthwhile for a
service sector as well to be eco-efficient in order to reduce costs. At about
the

same

time

new

environmental

regulations

influenced

the

responsibility of business for its environmental impact. After mainly

managing costs and risks connected with environmental issues the

financial sector began to explore business opportunities connected with
sustainable development as well. Weber (n.d., p. 3) also stated that in the
beginning of the 1990 the first sustainability mutual funds, indices and
other financial products and services were
Green Banking
Report | 16

launched. Since then their market share is increasing. They changed the
landscape of financial products and services as they re-integrated nonfinancial issues like the environment or sustainability into financial
decision making processes and product development.
Weber (n.d., p. 3) again explained that another event that influenced the
financial sector to consider environmental responsibility was the launch of
the Kyoto Protocol on climate change mitigation. Because financial
instruments were needed to reduce carbon emissions, the financial sector
engaged in creating products and services around carbon reduction,
carbon offsets and financing projects under the Kyoto Protocol mechanism.
However, today the view about social or environmental responsibility in
changing from managing environmental risks into creating positive
impacts on sustainable development by using different financial products
and services. This new view is reflected in the Global Impact Investment
Network (GIIN) and in the Global Alliance for Banking on Values (GABV)
both of which emphasizes the positive role that the financial industry can
play in fostering sustainable development.

3.3
BANKING

COMPONENTS OF GREEN

The scope of Green Banking is huge- leading to the way of Green

Economy in a broad sense. So determining all the components of Green
Banking is a difficult task. However, the following can be a short checklist
of the components of Green Banking.
Online banking
a)
b)
c)
d)
e)

Paying bills online,

Remote deposit/ bKash
Online fund transfers
E statements
Automated clearing
house

Green Accounts (ATM Service)

Green Financing
Power Savings Equipments
Green Debit Cards/ Credit
Cards
Save Paper
Mobile Banking

Green Banking
Report | 17

3.4
BANKING

CHALLENGES TOWARDS GREEN

Although the concept of Green Bank is considered as a sustainability issue

but it is true that achieving the actual response of Green Banking
initiatives is associated with some major challenges like:
DIVERSIFICATION MATTERS
Green banks will be screening their customers and naturally, theyll be
limiting and restricting their business to those entities that qualify. With a
smaller pool of customers, theyll automatically have a smaller profit base
to support them. If they focus their loans on certain industries, they open
themselves up to being much more vulnerable to economic shifts.
THESE BANKS ARE STILL STARTUPS
Apparently, it takes 3 to 4 years for a typical bank to start making money.
Many green banks in business today are very new and are still in startup
mode. It doesnt help that these banks are trying to get their footing
during a recession.
BANKS ARE SPECIALIZED
Again, while the main goal of a green bank is to do good by supporting
those who are taking care of the environment, the question here is just
how much money is there in these businesses and in the eco-friendly
industry? Saving the environment does not necessarily equate to making
a profit. Hopefully though, this premise is proven wrong in this case and
that green banks prove that they can survive, even as they face
restrictive requirements for doing business.
OPERATING EXPENSES AND COSTS ARE HIGHER
Green banks require specialized talent, skills and expertise as well, due to
the kind of customers they are servicing. Employees, such as loan
officers, need to have additional background and experience in dealing
with green businesses and consumers. Plus, giving breaks to such clients
via discounted loan rates can eat at their profit margins.
REPUTATION RISK
In all likelihood, due to growing awareness about environment safety,
banking institutions are more prone to lose their reputations if they are
involved in big projects, which are viewed as socially and environmentally
damaging.

Green Banking Report | 18

3.5
INTERNATIONAL INITIATIVES OF
GREEN BANKING
Environmental responsibility has always achieved importance from the
international community. During early 1990s there had been a growing
concern about the environmental management system because of
increasing energy prices and new environmental regulations.
However, from that time financial institutions have been trying to mitigate
social and environmental risk issues by introducing different
environmental friendly policies & operations. Today the financial sector
has begun to explore business opportunities connected with sustainable
development one of the result of which is the concept of Green Banking.
According to Pravankar (2008, p. 8)-in the beginning of the 1990 the first
sustainability mutual funds, indices and other financial products and
services were launched.
DEVELOPMENT OF UNEP
During the early 1990s the United Nations Development Programme
(UNEP) was launched which is now known as UNEP Finance Initiatives.
The objective of this initiative was to integrate environmental
considerations into the regular business operations, asset management,
and other business decisions of the banks. (Pravankar 2008, p. 8)
INITIATIVES TAKEN BY RENOWNED INTERNATIONAL
ORGANIZATIONS
Pravankar (2008, p. 9) also mentioned that during the year 1991 to 2002
some renowned international organizations had taken different initiatives
regarding environment friendly business practices like:

Green Banking
Report | 19

DEVELOPMENT OF EQUATOR PRINCIPLES

All these concerns for sustainable finance or green finance have
compelled the banking institutions to devise a common and coherent set
of environmental and social policies and guidelines that can be used to
evaluate the projects. Then a small group of banks along with IFC came
together to initiate the process of designing the common guidelines in
October 2002 and came up with a guidelines in June 2003 that is known as
Equator Principles with 10 leading commercial banks adopting these
voluntary set of principles.
ABOUT THE EQUATOR PRINCIPLES
The Equator Principles (EPs) is a credit risk management framework for
determining, assessing and managing environmental and social risk in
Project Finance transactions. It is based on the International Finance
Corporation Performance Standards on social and environmental
sustainability and on the World Bank Group Environmental, Health, and
Safety Guidelines. (The Equator Principles 2006, p. 1)
There are 10 broad principles under the EP framework. Eventually these
principles have become the industry standard for environmental and
social risk management and financial institutions, clients/project sponsors,
other financial institutions, and even some industry bodies refer to the EPs
as good practice.
Currently 79 adopting financial institutions (77 EPFIs and 2 Associates) in
32 countries have officially adopted the EPs, covering over 70 percent of
international Project Finance debt in emerging markets.

Green Banking
Report | 20

3.6 GREEN BANKING PRODUCTS & SERVICES

AROUND THE WORLD
Today there are a number of banks and other financial institutions around
the world who are offering their customers different products and
services that are environmentally sustainable. Some of these products
are really innovative and some are traditional with some benchmarking
environmental features.
However, according the report of IFC Consulting Canada Inc. 2007, Green
Banking products and services around the world can be seen from two
broad perspectives- 1) Products and services related to Retail Banking
and 2) Products and services related to Corporate & Investment Banking.
RETAIL BANKING

Products
Home Mortgage

Product Features

Banks

Government
led
green
mortgage initiative.
1% reduction on interest
for Dutch Bank
loans that meet environmental
criteria.
Offers free home energy rating
and offsets carbon emissions for
CFS
every year of loan.
Generation Green Home Loan
Offered to both new and old
homes, so those with existing
Bendigo
mortgages can take advantage of
Bank
discounted rates.
All projects must exceed state
requirements.
Green Power Oriented Mortgage
Provides an
incentive for
homeowners to use renewable
power.
N/A
Design focuses on sustainable
behavior or customer, rather than
on physical infrastructure of
their residence.
MyCommunityMortgage
and
Smart
Commute
Initiative Fannie Mae
(Citigroup)
Mortgage
Available to help borrowers buy
energy efficient
homes and use

Regions
Europe

Europe
(UK)

Australia

N/A

US

Green Banking
Report | 21

public transportation.
Products feature a variety of
options and flexible terms.

Commercial
Building Loans

Home Equity
Loan

CMHC offers a 10% premium

refund on its mortgage loan
insurance
premiums
and
extended amortization
to a
CMHC
maximum of 35 years (subject to
(CIBC,
lender availability) to purchase
BMO)
energy efficient homes or make
energy efficient renovations.
Refund is a one-time payment.
Green Loans for new condos
Developer
repays loan
with
funds that would otherwise be
spent on operating costs using
conventional equipment
and TAF/Tridel
material.
Buildings must
demonstrate
25%+ energy savings
over
conventional designs.
Provides first mortgage loans for
building and refinancing LEEDcertified commercial buildings.
Developers do not have to pay
Wells Fargo
an initial premium for green
commercial buildings, due to
features such as: lower operating
costs and higher performance.
Provides 1/8 of 1% discount on
loans to
green leadership
NRB
projects in the commercial or
multi-unit residential sectors.
One-Step Solar Financing
Takes place over a 25-year term,
NRB
equal to the same period of time
as the solar panel warranty.
Environmental Home
Equity
Program
Bank of
For customers using line of Visa
America
Access Credit, bank will donate
to an environmental NGO.
Bank signed a joint marketing
agreement
with
Sharp
Electronics Corporation to offer
customers easily accessible and Citigroup
convenient financing options to

Canada

Canada

US

US

US

US

US

Green Banking Report | 22

purchase and install

residential

solar technologies.

Auto Loan

Fleet Loan

Credit Card

Enables users to take out a home

equity loan or line of credit
rather than access savings or take
out a general loan.
Clean Air
Auto Loan
with
preferential rates for hybrids
Product recently
redesigned to
cover all low-emitting vehicle
types.
GoGreen Auto Loan
Product has achieved worldwide
recognition as a
successful
green product.
Since launch, the banks number
of car loans has increased by
45%.
Small Business Administration
Express loans, with
rapid
approval process, no collateral
and flexible terms, are offered to
truck companies to finance fuel
efficient technologies.
Helps to purchase
SmartWay
Upgrade kits that can improve
fuel efficiency by up to 15%.
Affinity Cards
Bank partners with
ENGO,
which accepts future royalties in
exchange for the use of its name
and logo. APR 15-22%, many
with annual fees.
Climate Credit Card
Bank will donate to WWF.
Sum of donation depends on the
energy-intensity of the product
or service purchased with the
card.
GreenCard Visa
The worlds first credit
card to
offer an emissions
offset
program.
BarclayBreathe Card
Include discounts and
low
borrowing rates to users when
buying green products
and
services.

VanCity

Canada

Mecu

Australia

Bank of
America

US

Various

Various

Rabobank

Europe

Tendris
Holding
B.V.

Europe
(NL)

Barclays

UK

Green Banking
Report | 23

Deposit

Sales

50% of card profits will go to

fund
emissions
reduction
projects, worldwide.
Existing cardholders can donate
Visa WorldPoints rewards to
organizations that invest in GHG
reductions or redeem them for
green merchandise.
Bank donates 1.25 per 100
spent by personal (Co-op debit
and credit cards) and business
customers (Co-op Business Visa)
to the banks Customers Who
Care Campaigns.
Landcare Term Deposit
Australias first environmental
deposit product.
For every dollar spent, bank
lends equivalent to
support
sustainable agriculture practices.
EcoDeposits
Fully-insured
deposits
earmarked for lending to local
energy
efficient
companies
aiming
to
reduce
waste/pollution, or
conserve
natural resources.
EcoCash
Checking Account allows for 5
free paper checks a month, with
US$3 per check fee applied. A
portion of this fee goes to The
Climate Trust.
Consumers
can offset
CO2
emissions associated with
air
travel,
with no funds
being
channeled to the bank.
This new initiative is in
partnership with the offsetting
organization Climate Care.

Bank of
America

US

CFS

UK

Westpac

Australia

Shorebank
Pacifc

US

Barclays,
HSBC

Europe

Green Banking Report | 24

CORPORATE & INVESTMENT BANKING

Products
Project Finance

Partial Credit
Guarantee
Securitization

Product Features
Specialized service
divisions
are dedicated to long-term
financing of clean
energy
projects.
Some banks also specialize in
one (or several)
renewable
technology type and/or place a
premium on working
with
states
where
regulatory
framework and government
policy encourages
the early
adoption of clean technologies.
Led the effort to raise $1.5
billion of equity for the wind
power market in 2006, with
approximately $650
million
allocated to its own portfolio.
The farms renewable
energy
portfolio
now
comprises
approximately $1
billion of
equity investments in 26 wind
farms since its inception in
2003.
The farm is also actively
pursuing
investments
in
biomass, geothermal, and solar
power.
Portfolio financing technique
Combines the financing of a
portfolio of renewable energy
projects to the construction
risks associated with project
development.
Lead arranger on energy-fromwaste project financing
that
includes
a 25-year
loan
supported by waste contracts
with local authorities and
corporate backing on noncontracted waste.
Financial institution provides a
bond issued by a municipality
to
finance
environmental
projects.
A risk sharing arrangement for
environmental projects.

Banks/ FI
BNP Paribas
(Wind),
Rabobank,
Barclays,
Fortis,
Standard
Chartered
Bank,
WestLB
(Biofuels
and Wind)

Regions

JPMorgan

US

Dexia
(Wind)

US

Global

Bank of
Ireland

Europe

IFC

Global

Green Banking
Report | 25

Bonds

Technology
Leasing

Private Equity

Financial institution represents

a guarantor (or
structuring
IFC
investor) at the
mezzanine
level of risk, allowing client to
transfer risk to bank.
Eco-Securitization scheme will
test the feasibility of financing
natural infrastructure
by
IFC and
linking
sustainable
DFID
management of resources with
the funding capacity
and
requirements of asset-backed
securitization.
Green
Mortgage-Backed
Securities (Proposed).
Designed
to
package
mortgages on buildings that
meet specific energy-use and
Not yet
environmental benchmarks.
implemented
Products would be rated higher
and worth more as a result of
the
operational
benefits
associated
with
green
buildings.
Forest Bond designed to fund
large-scale reforestation in
Panama.
Reinsurers underwrite a 25-yr
Various
bond, while investors and
frequent users of
Panama
Canal will purchase the bond.
Cat Bonds provide ancillary
capital for risks from natural
BNP Paribas,
catastrophes.
Goldman
Can pay higher than average
Sachs,
yield,
while diversifying
Lehman
investors portfolios
and Brothers
improving industry reserves.
Provides environmentally-friendly
Deutsche
technologies at preferential rates.
Bank,
ABN
AMRO, and
ING Group
Private equity investments
in
wind, solar and bio-fuels through
Alternative
Investments Citigroup
Sustainable
Development
Investment Program.
Private
equity focused
on
forest
conservation
and

Global

Global

US

Latin
America

Global

Europe

US

Green Banking Report | 26

Indices

preserving biodiversity.
Provides 100% financing, with
a discounted rate on the loan,
to a non-profit organization to
acquire biologically sensitive
land
and
implement
sustainable forestry practices
and management.
Series
of
environmental
private
investor eco-market
products includes a bio-fuels
commodity
basket,
total

Carbon Finance
& Emissions
Trading

Bank of
America

ABN
AMRO,
JPMorgan

returns solar energy index,

clean renewable energy index
and total returns water index
(e.g.,
enables
interested
parties to invest in water as a
commodity).
Banks provide equity, loans
and/or upfront or
upon Barclays
delivery payments to acquire
Capital,
carbon credits from CDM and
HSBC,
JI projects.
Fortis, ABN
Most acquire carbon credits
AMRO,
in order to
serve
their BNP Paribas,
corporate clients compliance
needs, supply
a tradable
product to the banks trading
desks, or develop lending
products backed by emission
allowances
and
carbon
credits.
Allowance
trading products
can include, but are not limited
to: discreet placement of
physical orders;fixed-orfloating swaps and indexed
sales or purchases; options;
allowances
repurchase
structures; market-making for
spot and forward trades; and
price hedging based on crosscommodities.

US

JPMorgan,
Goldman
Sachs,
Citigroup,
among
others

Various

US/
Europe

Global
(Mainly
Europe)

Europe

Green Banking Report | 27

3.6
BANGLADESH

GREEN BANKING PRACTICES IN

The economic development of any country is inextricably linked with

environmental issues because activities of financial institutions may boost
wealth creation as well as environmental degradation. Bangladesh is
identified by climate change experts as being among the countries more
severely challenged by climate change threat with correspondingly high
urgency of preparedness with mitigative and adoptive responses. The
government and the central bank of Bangladesh is fully conscious about
this issue and have played a proactive role in this regard.
As being realized that bank as a responsible financial institution has a
significant role to play in these game changing developments,
Bangladesh Bank, the central bank of Bangladesh has taken the first
initiative to make activities of the financial institutions of Bangladesh
more environmentally responsible at the beginning of the year 2011.
Green Banking as a concept of sustainable banking practices was formally
introduced in Bangladesh on February 2011 with the development of an
indicative Green Banking Guideline for Banks and Financial
Institutions by Bangladesh Bank. The main objective of this guideline is
to give a detail and indicative advice to all the commercial banks of
Bangladesh to adopt environment friendly financing policies as well as to
take appropriate initiatives to make internal operations more energy
efficient and environment conscious.
RULES & REGULATIONS GOVERNING GREEN BANKING IN
BANGLADESH
With a view to encouraging sustainable development in Bangladesh, the
government of Bangladesh has formulated two important documents
namely the Environmental Conservation Act 1995 and the
Environmental Conservation Rules 1997. These two documents
basically make the ground rules for Green Banking in Bangladesh.
In January year 2011, Bangladesh Bank as a regulatory body in the
financial sector of Bangladesh had formulated the Environmental Risk
Management Guidelines for Banks and Financial Institutions. The ERM
guideline basically represents structured formats of addressing
environmental risks in project financing and also provides standards in
this regard.
Besides, in February 27, 2011 Bangladesh Bank formulated the Green
Banking Policy Guidelines that provides a standard format for the
commercial banks in Bangladesh to develop their own Green Banking
Policy.

The Green Banking practices in Bangladesh can be viewed from three perspectives: 1)
Initiatives taken by Bangladesh Bank, 2) Initiatives taken by Government & 3) Initiatives
taken by other commercial banks.

Green Banking
Report | 28

INITIATIVES TAKEN BY BANGLADESH BANK

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. With the different initiatives of in-house green
activities, the authority has developed an indicative Green Banking Policy on
February 27, 2011 which aims to provide a detail guideline to all the
commercial banks to adopt Green Banking policy. (Morshed et al. 2012, p. 5)
The policy is to be rolled out in the following three phases:

Green Banking Report | 29

Besides developing a formal guideline regarding Green Banking practices,

Bangladesh Bank has also launched a refinance program of Taka 2 billion
for different types of Green financing like Solar Irrigation Pump Station,
Solar Home System, Bio Gas Plant, ETP, HHK and Solar PV module
assembling plant.
INITIATIVES TAKEN BY GOVERNMENT
The government of Bangladesh has already invested USD 10 billion over
the last three decades to make the the country climate resilent and less
vulnerable to disester. According to Morshed, Rubayat & Singha (n.d., p. 4)
over the past three fiscal years (FY2009-10 to FY 2011-12) the
government has allocated USD 300 million under the following two
specialized funds regarding sustainable development:

INITIATIVES TAKEN BY COMMERCIAL BANKS

According to Morshed et al. (2012, p. 5) With some formal guidelines of
Bangladesh Bank as well as government, the commercial banks of
Bangladesh have also come up with some remarkable initiatives regarding
green banking like:
Policy Formulation and Governance
Budget Allocation
Green Banking Unit/Cell/Desk
Incorporation of Environmental Risk in Core
Risk Management (CRM)
Banks In-house Green Activities
Green Finance

Climate Risk Fund

Green Marketing
Green Banking
Branches powered by Solar Energy
Improved In-House Environment Management
Employee Training, Consumer Awareness and
Green Event

Green Banking Report | 30

TOP 10 BANKS PRACTICING GREEN BAKING DURING 2012

According to the report of Bangladesh Bank the top 10 banks in
Green Banking activities by the end of the year 2012 are:
1. AB Bank Limited
2. Bank Asia Limited
3. Eastern Bank Limited
4. EXIM Bank Limited
5. IFIC Bank Limited
6. Islami Bank Bangladesh Limited
7. Prime Bank Limited
8. Rupali Bank Limited
9. Social Islami Bank Limited
10.

Standard Chartered Bank Limited

GREEN BANKING IN PRIME BANK LIMITED

The Prime Bank Limited started its journey in 1995 and within a very
short period of time the bank achieved a very good reputation in the
industry. From the inception sustainable development and reputation
building was the focus of all banking activities of the bank. As a
result the bank has been graded as top class bank by the
internationally excepted CAMELS rating.
Md. Shirajul Islam, the Ex Chairman of the Prime Bank Limited was
the pioneer of the Green Banking Initiatives in the organization.
Under his direction the Prime Bank Limited started its online banking
service from 2010.
At the beginning of the year 2011 when Bangladesh Bank formulated
the Policy Guidelines for Green Banking and urged all the commercial
banks to introduce the Green Banking concept, the Prime Bank as a
responsible corporate citizen formulated a Green Banking Committee
and a Green Banking Cell under the Risk Management Division and
on December 27, 2011 the GBC developed the Green Banking Policy
of Prime Bank Limited.
During the year 2012, the Prime Bank Limited has made BDT.
3589.37 million Green Finance for installation of ETP and projects
having ETP. Besides, 12 branches and 5 SME/ ATMs have been
powered by solar energy. The GBC of the bank has developed a
Green Office Guide and two Sector Specific Policies by this time of
the current year.

CONCEPT OF MANAGEMENT ABOUT

GREEN BANKING
As a responsible corporate citizen the Prime Bank Limited has come
up with real initiatives to introduce Green Banking in the
organization. By this time the bank has formulated a Green Banking
Cell under the RMD, incorporated the Environmental Risk
Management Guidelines into the Core Risk Management Guidelines
and prepared an indicative Green Banking Policy and instructed
employees accordingly.
However, although the management committee of the Prime Bank
Limited is conscious about the environmental responsibilities of a
financial institution but it thinks that taking all the initiatives as
instructed by Bangladesh Bank is not possible. For example: there is
a lack of real initiatives of the bank in developing Green Products like
Green Credit Cards or Green Deposit Accounts both of which
associates some environmental features. The management thinks
that providing such products will initially increase the charges from
customers and there is also a lack of willingness and awareness of
clients about environmental responsibilities.
Another important issue is that, virtualization of all the banking
products like different kinds of memos, forms, documents, bills etc.
and banking services like online facilities for running different kinds
of accounts is very difficult. The reason is that most of the clients
dont have access to internet for running virtual accounts. Besides,
clients demand printed documents as evidence of their banking
activities.
Besides, the management of Prime Bank thinks that guidelines of inhouse environment management should be adopted in all branches.
But the MANCOM also thinks that it will take time. Location creates a
big problem in transforming existing materials into more energy
efficient one.

4.3
BANKING

FORMAL DOCUMENTS OF GREEN

Green Banking Policy Guideline: As per BRPD Circular No. 2 of

Bangladesh Bank, the Prime Bank Limited has formulated its own
Green Banking Policy at December 27, 2011 which is called PBLs
Environmental Blueprint.
Green Office Guide: The Green Banking Cell as per instructions
from the management committee has formulated an instructive
Green Office Guide which is yet to be approved by the MANCOM.
Sector Specific Policy: The GBC of the Prime Bank Limited has also
formulated two sector specific policies recently which are also yet to
be approved by the MANCOM. These are:
1. Sector specific policy for RMG & Textile Industry
2. Sector specific policy for Ship Breaking Industry
Quarterly Report to BB: The bank has also developed a standard
reporting format with the instruction of Bangladesh Bank to report to
the BB on a quarterly basis about the Green Banking activities of the
bank.
Sustainability Report: Disclosure of the Green Banking initiatives
or sustainability report is a requirement under phase two of the
Green Banking Policy of Bangladesh. Prime Bank Limited has
published two reports about Sustainability & Green Banking
Initiatives of the bank in the annual report of 2012.

Green
Banking
Report | 36

4.4
REASONS TO INTRODUCE
GREEN BANKING
Prime Bank Limited is one of the reputed private commercial banks in
Bangladesh. The management committee is very conscious about the
goodwill of the bank and as a result there have been some initiatives
like assessing the financing process carefully, providing internet
banking facility to the clients etc. taken by the bank before the formal
instruction of Bangladesh Bank regarding Green Banking. So from the
viewpoint of GBC of Prime Bank Limited there are three core reasons
side by side of BB instructions to introduce Green Banking in the
organization. These are:
Credit Risk: Unusual weather pattern and global worming can cause
financial institutions to suffer from credit risk. For example, adverse
climate change may severely hamper a project financed by the bank
and thus lead to a credit default. Realizing this issue Prime Bank
Limited has rearranged its risk management policy by incorporating
the Environmental Risk Management in its Core Risk Management
Policy.
Legal Risk: Legal risk arises when financial institution finance to a
project that is environmentally harmful. In that case the financing
institution will be liable by the environmental acts. So this is another
important reason to introduce more environment friendly financing
policies.
Reputational Risk: In recent times bank are facing extreme
reputational risk arising from some recent big loan scandals. Besides,
the environmental awareness is also increasing day by day.
These issues together drive the Board of Directors of Prime Bank
Limited to introduce a Green Banking Policy which is called PBLs
Environmental Blueprint by the end of the year 2011.

Green Banking
Report | 37

4.5
PRIME BANK

CONCEPT OF GREEN BANKING IN

Components of Green Banking include the factors that affect the Green
Banking activities of the bank. The following are the major components
of Green Banking in Prime Bank Limited.
GREEN BANKING POLICY
As per the instruction of Bangladesh Bank, Prime Bank Limited
formulated its Green
Banking Policy which is called PBLs Environmental Blueprint.
According to Green
Banking Policy of Prime Bank Limited, the policy shows PBLs view on
environmental issues and describes the Bank's environmental risk
management procedures and practices.
However, from my observation I have found that the policy is created
highlighting the issues that should be done with reference Bangladesh
Bank guidelines and instructions. Some specific issues of the policy
represent unorganized information.
Besides, the effectiveness of policy also depends on the sound
understanding of the policy. However, during my internship program at
the organization I found that only one employee under the risk
management division of the bank is overseeing all the Green Banking
activities. The Green Banking Policy is not disclosed to all the concerned
departments.
CLIMATE RISK FUND
Climate Risk Fund is one of the major components of Green Banking. It
is required as a precautionary measure for possible safeguards and
mitigating hazards due to climate change. A Climate Risk Fund is also
required for the banks as part of their CSR activities that relate to
climate change conditions.
In 2012, Prime Bank Limited has created a Climate Risk Fund and up to
the year 2012 it has allocated Tk. 60 million for this fund. However, by
the end of the year 2012 the bank made no utilization of this fund.
IN-HOUSE ENVIRONMENT MANAGEMENT
Strategy of reuse, recycling of materials and equipments, and source
reduction and waste minimization strategy is a part of in-house
environmental management. The Green Banking Cell of Prime Bank
Limited has developed a Green Office Guide to reduce water, paper
and electricity consumption which is yet to be approved by the

MANCOM. Without this there is no special initiatives taken in the bank to

actually reduce the use of electricity, paper, water etc.

Green Banking
Report | 38

GREEN FINANCE
Green finance as a part of green banking makes great contribution to the
transition to resource efficient and low carbon industries i.e., green
industry and green economy. Prime Bank financed various projects which
are environment friendly. The projects which contribute to degradation or
deterioration of the environmental issues are usually avoided. The bank
financed Effluent Treatment Plants (ETP) of RMG and textile sectors and
projects having ETP. In 2012, the bank extended finance of Tk. 94.42
million for installation of ETP and Tk. 346.28 million for financing projects
having ETP.
However, in case of Green Finance, Prime Bank has exposure in only two
sectors-Installation of ETP & Projects having ETP. The bank has no
investment in solar plant project, bio-gas plant project, bio-fertilizer plant
project up to year 2012.
GREEN PRODUCTS
Prime Bank has introduced various services which are reducing paper use,
fuel consumption etc. Internet Banking, Online Banking, SMS Banking and
Phone Banking are such services which are gaining popularity day by day.
Besides, the bank has already introduced two specific brands under the
Green Banking Products category namelyALTITUDE and PRIME CASH.
ALTITUDE: This is basically an internet banking facility that provides
opportunity-

PRIME CASH: It is a Biometric Smart Card where the thumb impression of

a client will work as an authentication code. This smart card is very simple
because there is no use of SMS, PIN number or mobile phone. Rather, only
the smart card and the clients thumb impression is required. Besides, the
smart card is also secured because it is required the thumb impression to
authenticate a transaction.
GREEN MARKETING

Prime Bank allocated Tk. 15 million per quarter for green marketing,
training and capacity building. After introduction of SMS banking, green
marketing is gaining momentum. Through push and pull system, the
customers are becoming aware of banks new products and initiatives.
Employment notices are given on website and
Green Banking
Report | 39

online applications are invited now. Kiosk machines installed at different

places for the awareness to the customers of the banks product instead
of sending paper ads and door to door mail delivery. In addition, CSR
activities had contributed to the field of health and green finance as well.
However, during 2012 the bank has allocated a total of Tk. 60 million for
Green Marketing but utilized only Tk. 0.03 million up to 2012.
EMPLOYEE TRAINING
Actually there has been no formal training program conducted by the
Prime Bank Limited for giving instructions to the employees regarding
Green Banking Policy of the bank. However, the bank has arranged some
workshops on Green Banking where only the top executives of the bank
from different branches participated.

Green Banking Report | 40

4.6
MANAGEMENT FRAMEWORK OF
GREEN BANKING
The Green Banking Cell of the Prime Bank Limited is working under the
Risk Management Division. The RMD consists of 6 members which are
also the member of the Green Banking Cell. All the works of the Green
Banking Cell are supervised by a Management Committee regarding
Green Banking and the decisions of any Green Banking initiatives are
taken by the Borad of Directors.

Overall Responsibility
The Management Committee responsible for ensuring the integration
of Environmental Risk Management into Credit Risk Management. The
operational responsibility is carried out by the Head of Risk
Management Unit/Head of Green Banking Cell Mr. Debashis
Chakraborti. The Board of Directors allocate and approve a
considerable amount of fund in its annual budget for Green Banking.

Internal Reporting
Green Banking Cell (GBC) actively and continuously works with
Business Team, HRD, LSSD, CAD, CRM & RMU to improve its
environmental management system and environmental qualities of the
projects which it finances. It reports to the
Management Committee (MANCOM) on Environmental Issues
periodically and takes the initiative to comply with the reporting
directions provided by Bangladesh Bank.
External Reporting

Green Banking Practices: GBC reports on the initiatives/activities

under the said program to the Department of Off-site Supervision of
Bangladesh Bank on quarterly basis. Similarly it submits reports on the
subsequent quarters within the next 15 days of
Green Banking Report | 41

the respective quarter end. The GBC also keeps their annual report and
websites
updated
with
the
disclosures
on
green
banking
initiatives/activities.
Environmental Risk Management: GBC has already developed a
reporting system with the assistance of Bangladesh Bank, with a view to
intimating management, shareholders, and other stakeholders on the use
of these Guidelines. This reporting is done on an annual basis in the
Annual Report as the Sustainability Report & Green Banking. These are
enclosed under the ANEX part of this report.
Besides, there are two specific functions which are also considered under
the management framework of Green Banking. These are:
Credit monitoring function
This function is to ensure that environmental risk monitoring shall also be
undertaken as a part of monitoring credit risks. Prime Bank Limited has no
separate Credit Monitoring Unit and thus CAD/CRM performs the credit
monitoring functions and provides the necessary information to the GBC.
Database on Non-Performing Loans (NPLs) due to Environmental
Risks
GBC has already established a database of NPLs that are due to
environmental reasons. If the borrower has indicated environmental
factors as one of the reasons for delays in making repayments, then this is
noted in the database. The purpose of this database is to ensure that the
Prime Bank Limited streamlines its own institutional knowledge for better
decision-making in its future financing.

Green Banking
Report | 42

4.7INSTITUTIONAL
GREEN BANKING

ARRANGEMENTS

FOR

The institutional arrangements of the Prime Bank Limited for Green

Banking can be viewed from two perspectives.
1) Arrangements for Environmentally Responsible Internal Operations
2) Arrangements for Environmentally Responsible Financing Policies
ARRANGEMENTS FOR ENVIRONMENTALLY RESPONSIBLE INTERNAL
OPERATIONS
To foster a more energy or resource efficient internal operations, the GBC
of the Prime Bank Limited has completed the formulation of an indicative
Green Office Guide which is yet to be approved by the Management
Committee.
The principles of the Green Office Guide are formulated in a way so that it
will inspire all the employees of the bank to follow those principles. The
purpose of the Green Office Guide is to inspire and aware the employees
of the bank about how they can maximize their effort to minimize the
wastage of resources.
The main Slogan of the Green Office Guide is REDUCE, REUSE &
RECYCLE. According to the Green Office Guide all the employees of the
Prime Bank Limited are instructed on the following issues:
Computers, Printers, Photocopiers

Switching off all the equipments while not in use

Program equipments to Hibernate in office times
All the office equipments must be shut down after office hours

Making sure that all the employees know how to use the
equipments as for not to waste resources in unlearned hands
A LCD or Desktop Monitor use energy as of energy needed for
printing 800 Laser prints if it is left open for 8 hours without use. So
it is very important to shut down all the equipments
Personal computers must be shut down while not using it

Laptops should run in battery saving mode. The charger should not
be plugged in while running on battery.
Photocopiers and Printers have high electricity consumption and
these equipments are mostly turned on idle. All the employees must
know how to use them efficiently and must make sure to turn them
off after use.

Air Conditioning

Use of Fans and natural ventilation when possible

Use Energy efficient, Eco-friendly Air Conditioners

Buy Programmed AC which has motion detection on, allowing them

to maintain proper room temperature
Green Banking
Report | 43

Use Central AC system rather than Split or Box AC as the use of

resources will be less.
Close all windows, doors to maximize the cooling while AC is turned on
Set Air Conditioning at a Minimum of 24C which will keep proper balance of Air
All the AC will be turned off after 7pm ( End Of Office Hours)
Switch off all the AC while leaving the room

Lights

Use of natural lights whenever possible. This will save a significant

amount of energy and associated greenhouse gas emissions
Replacing bulbs with energy efficient bulbs. This will not just only
reduce costs but also energy consumption.
Replacing Spotlights with same effect but with more energy saving.
Like using 20W halogen light instead of 50W will reduce 60% of
energy but serve with same lighting
Cleaning and maintaining lamps and bulbs will create light efficiency.

Everyone must know Last man to leave the room , turns off the
switch rule not in just lights but in all equipments
All the lights except very important security lights will be turned off
after Office Hours
The Cleaning stuff must be trained to turn off all the lights and
equipments while not necessary

Conservation of Water

Must conserve Water as the best possible way

Use of water bottles which can be reusable
Cleaning Staff must commit to reduce water usage in cleaning procedures.
Install low-flush toilets and water saving faucets in the restrooms.

Purchase of Stationeries

Office Stationeries should be bought which are needed

Seek & Inspect for Energy Saving, Environment Sustainable or Ecofriendly products for purchase before buying
Seeking for longevity, reusability, refill-ability and recyclability of
Products like Printers, Scanners and Photocopiers before Purchase
Seek products made out of or has elements of Recycled Products
All office elements should be eligible for recycling at the end of its life
Office shall buy Recycled papers for their use.

Green Banking Report | 44

Reuse of Stationeries

Reuse of Single Sided Paper as notepads or draft copies usable

within office
Reusing Clip-files, Covers , Folders
Use of Reusable Cups, Crockery & Cutlery within Office
Encourage the use of Reusable Bottles instead of Single use water Bottles
Making the Office Journals, Journal Subscription common for all Employees
Selling used papers to the firms who are recycling the papers

Use of Email instead of paper works with clients who understand

internet business.
Use telemarketing and email marketing
Reduce the use of Paper to the best possible way

Single Transportation on the Same Rote

Transportation is another important issue when we thinking about energy
or resource consumption. There are a number of employees of every
organization who uses the same rote everyday for reaching to the
workplace. To reduce the consumption of diesel as well as to reduce the
emission of CO2 PBL has encouraged its employees to use a single vehicle
for the transportation purpose on a same rote. Besides, all the vehicles
used for banking purposes use CNG which also contributing to the
reduction of CO2 emission.
ARRANGEMENTS FOR ENVIRONMENTALLY RESPONSIBLE
FINANCING POLICIES
Prime Bank Limited has already incorporated the Environmental Risk
Management Guidelines of Bangladesh Bank into its Core Risk
Management Policy. So when the bank considers any business project for
financing purpose the Green Banking Cell under the Risk Management
Division performs a detail Environmental Due Diligence analysis with the
regular Financial or Legal Risk assessment.
However, Environmental Risk Rating assessment is applicable for the
following cases for both new and
Greenfield projects as well as those pertaining to the existing ones:

Green Banking
Report | 45

Credit Processing and Approval Process

For a project that is considering to finance and is applicable to the
Environmental Risk Assessment, a detailed Environmental Due-Diligence
is assessed using the General EDD and the Sector Specific EDD checklist
of the Environmental Risk Management Guideline of Bangladesh Bank.
The General EDD: This checklist is provided under the Technical ANNEX
Part of the Environmental Risk Management Policy of BB based on which
the Prime Bank initially determine the general environmental risk of the
project.

Green Banking
Report | 46

The Sector Specific EDD: The Technical ANNEX Part of the Environmental
Risk Management Policy of BB also represents sector specific due
diligence checklist for 10 specific sectors. These are:
1. Agri-business
2. Cement
3. Chemicals (Fertilizers, Pesticides
and Pharmaceuticals)
4. Engineering and Basic Metal
5. Housing

6. Pulp & Paper

7. Sugar & Distilleries
8. Tannery
9. Textile and Apparel
10. Ship Breaking

After completing the Sector Specific EDD the following Matrix is used to
give the project a total Environmental Risk Rating (EnvRR).

Now at present the GBC of the Prime Bank Limited has formulated two
sector specific policies. One is for the RMG & Textile Industry and Ship
Breaking Industry. The reason is that the bank has much exposure in these
two sectors. But the bank is considering the other sectors for new
financing projects.
However, in general the Prime Bank limited takes a financing decision for
those projects having the low or moderate EnvRR. And in case of High
EnvRR projects the bank gives importance on personal relation with the
borrowers and also gives high importance on the additional
documentations in the Environmental Risk Management Policy of BB.

Green Banking
Report | 47

4.8
DIMENSIONS OR COVERAGE OF
GREEN BANKING
Green Banking basically considers all the activities and relevant
policies of a bank that have a direct or indirect impact on the
environment. As a result, identification of the areas that are related or
associated with the coverage of Green Banking is a difficult task.
However, in Prime Bank Limited the Green Banking Cell (GBC) is
working under the Risk Management Division (RMD). This is logical
because the Risk Management Division is responsible for assessing the
feasibility as well as fitness of a project.
Here the Green Banking Cell uses the policies related to the Green
Banking activities which provide a detail assessment of the projects
regarding viability as well as environmental sustainability.
Besides policy formulation, the GBC also provides necessary dictation
regarding Green Banking Policy to the Retail Department to consider
these issues when making any decision regarding procurement.
The Sales and Marketing Division of PBL is also concerned about the
development of Green Banking Products. PBL has been allocating Tk.
15 million per quarter for green marketing, training and capacity
building. By this time PBL has introduced various products which are
reducing paper use, fuel consumption etc. ALTITUDE (Internet
Banking), Online Banking, SMS Banking, Utility Bill Pay service,
EasyCash (Mobile banking), Phone Banking and Prime Cash (A
Biometric Smart Card) are such products which are gaining popularity
day by day.
Besides, the Human Resource Department (HRD) of the Prime Bank
Limited is concerned about the initiative of Green Banking. As part of
formal initiatives the HR division invites ideas from employees for Go
Green program at PBL. These ideas are generally evaluated and
selected for implementation from MANCOM.

Green Banking
Report | 48

4.9
PRACTICES

GREEN BANKING BEST

Prime Bank Limited has made some mentionable progress with

regards to Green Banking initiatives by the end of the year 2012.
The bank has formulated an indicative Green Banking Policy (as per
BB BRPD Circular No. 2), allocated budgets for Green Finance &
Climate Risk Fund, introduced some innovative products like
ALTITUDE, Prime Cash etc to facilitated online banking, prepared two
sector specific policies for RMG & Textile Industry and Ship Breaking
Industry etc.
But however, in my view the Green Banking initiatives of Prime Bank
Limited has not reached its expected level up to December 31,
2012. The reasons are:
Budget Allocation: Up to December 31, 2012 Prime Bank has
allocated a total of BDT. 500 million (BDT. 380 million for Green
Finance and BDT. 60 million for both Climate Risk Fund & Marketing
activities). But during 2012 the industry highest allocation for Green
Banking Activities was BDT. 41700.57 million made by Standard
Chartered Bank.
Budget Utilization: Prime Bank has utilized a very small portion of
the allocated budget for Climate Risk Fund and Marketing &
Capacity Building activities.
Allocation
millions)
Climate Risk Fund
Marketing
&
Building

Capacity

(In

Utilization (In millions)

60.00
60.00

0.00
0.03

In-House Green Activities: The in-house initiatives of Prime Bank

Limited regarding Green Banking are not good. Up to 2012Total number of branches of Prime Bank
Number of branches powered by solar
energy
Number of ATMs & SMEs powered by solar
energy

130
12
5

Besides, there have been no mentionable initiatives taken by the

bank to reduce the internal electricity consumption in the Head
Office at Motijhil.

Green Finance: Prime Bank Limited has exposure in only two kinds
of projects with regards to Green Finance. These are ETP and
Projects having ETP. During 2012
Prime Bank has financed a total of BDT. 440.70 million in these two
kinds of projects whereETP

94.42 million

Projects having ETP

346.28 million

Green
Banking
Report | 49

However, the bank is considering some new projects like Bio-Gas Plant,
Renewable Energy Plant etc. to finance in 2013.
Online Banking: Online banking or paperless banking is one of the basic
features of the Green Banking Initiative. Prime Bank Limited is lagging
behind in this sector too. Up to 2012 Prime Bank hasTotal number of accounts
Accounts facilitated with internet
banking
Accounts facilitated with SMS banking

663619

100%

14959

2.25%

7697

1.16%

Green Banking
Report | 50

4.10
BANKING

POLICY FRAMEWORK OF GREEN

PBLs Environmental Blueprint is prepared and structured according

to the policy guideline of Bangladesh Bank. From the 2011 to the
year 2013, the bank has been able to take necessary steps to
complete the objective of phase one.
1.1 Policy formation And Governance
As per the BRPD Circular No. 2, the Prime Bank Limited has
formulated its Green Banking Policy at 27 December, 2011. The
policy basically contains a framework of Green Banking of the bank.
The effectiveness of the policy largely depends on the awareness of
the employees regarding the policy. However, in my view there is a
lack of awareness about the green banking policy among the
employees of the bank. Besides, the policy is prepared reviewing
only the published material of Bangladesh Bank. As a result it is lack
of company specific factors and international standards.
1.2 Incorporation of Environmental Risk In Core Risk
Management
Prime bank has reviewed its Core Risk Management Guidelines
considering the Environmental Risk Management Guidelines of
Bangladesh Bank. I think for incorporating the Environmental Risk
Management Guidelines in the Core Risk Management, the banks risk
management policy has been strengthened.
1.3 Initiating in-House Environment management
The Green Banking Unit has formed a Green Banking Office Guide.
This guide implicates all the necessary means to ensure Energy
efficiency, Paperless communication, equipment purchase, recycling
of office equipment. This proves a complete Guideline for the
employees and management to comply to reduce carbon omission
and provide Eco-friendly banking.
However, although the GBC has prepared a Green Office Guide but I
think there is a lack of interest of employees to know about it and
there is also a lack of publicity of this guide.
1.4 Introducing To Green Finance
Although the bank has made Green Finance against its allocated
budget during the year 2012 (Allocation BDT. 380 million & Utilization
BDT. 3589 million) but it was lower compared to other banks in the
industry. Besides, Prime Bank has exposure in only to types of

projects- ETP and projects having ETP. So I think Prime Bank may
consider other green projects like Solar Plant, Bio-Gas Plant etc.

Green
Banking
Report | 51

1.5 Creation of Climate Risk Fund

As a requirement of the Green Banking Initiative of Bangladesh Bank, the
Prime Bank Limited allocated BDT. 60 million during the year 2012 for the
creation of a climate risk fund. But the bank did not utilize any portion of
the money during the said period.
1.6 Introduction of Green marketing
To communicate with the customers, potential clients the Prime Bank
Limited has implemented ATM screenshots, Email messages, SMS, and
other electronic medias to reduce previous paper based communications.
But I think the bank should focus more on developing products or services
that is associated with some environmental features and which will give
the bank a unique identity.
1.7 Online Banking
The Prime Bank Limited started its online banking services by the end of
the year 2008. But still only 2.25% of its total account is facilitated with
internet banking.
1.8 Supporting Employee Training, Consumer Awareness and
Green Event
From the formulation of the Green Banking Policy by the end of the year
2011 Prime Bank Limited conducted around 6 workshops mostly held in
Dhaka and covered only the company executives. There is also a lack of
proactiveness of the bank to encourage its clients to invest in more
environment friendly projects.
1.9 Disclosure and Reporting of Green banking Activities
Prime Bank disclosed its first Sustainability Report in the Annual Report
2012. The bank also discloses green banking initiatives time to time in
newspapers. However, there is a little disclosed materials in the website of
the bank regarding Green Banking. But I think the website is a very good
source of making publicity about any new initiatives.

Green Banking
Report | 52

RECOMMENDATI
ONS
As a renowned private commercial bank in Bangladesh, the Prime Bank
Limited has already given much importance in balancing non-financial
issues such as environmental and social issues with financial priorities to
demonstrate the characteristics of good corporate governance throughout
the bank. Up to the year 2012 the bank has made complementary
progress and has taken some real initiatives regarding Green Banking like:
formulation of an active and responsive Green Banking Cell (GBC),
financing ETP projects, formulation of Green Office Guide for in-house
environment management, formulation of two Sector Specific Policies,
investment for installation of Solar Plant etc.
However, since the idea of Green Banking is getting new dimensions day
by day and there is a good opportunity of the banks to link their goodwill
and image with there initiatives of Green Banking, I think PBL still has a
long way to go I also think that the Prime Bank Limited should focus on the
following issues more in the upcoming years to make a good position in
this regard:

Make regular adjustments and updates of the Green Banking

Policies.
Increase the exposure of Green Finance to new projects.

The Management Committee should take necessary steps to

circulate the principles of the Green Office Guide to all the branches
of the Prime Bank Limited.
The Management committee should take necessary steps to
develop new products or services with environmental features.
And finally the bank should arrange more training and workshop
programs to encourage the employees to follow and foster the
Green Banking Concept in their day to day banking affairs.

Green Banking
Report | 53

CONCLUSIO
NS
Green banking is no longer a new concept. The term has become popular
among the conscientious people in the backdrop of climate change.
Human activities have caused serious damage to the environment. All
have the responsibility to save the ecology by prudent activities. The
professional segment of the population of every country has a greater role
to play than the common man to check environmental degradation.
Bankers are an important professional group which has interaction with all
strata of people in the society. By adopting various green initiatives within
their in-house environment and also initiating prevention of air and water
pollution through their clients, bankers can contribute in a big way to this
noble cause. In a rapidly changing market economy where globalization of
markets has intensified the competition, the industries and firms are
vulnerable to stringent public policies, severe law suits or consumer
boycotts. This would affect the banks and financial institutions to recover
their return from investment. Thus, 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 if implemented sincerely will act as an effective ex ante
deterrent for the polluting industries that give a pass by to the other
institutional regulatory mechanisms. There has not been much initiative in
this regard by the banks and other financial institutions in Bangladesh
though they play an active role in its emerging economy. The banking and
financial sector should be made to work for sustainable development. As
far as green banking in concerned, Bangladeshs banks and financial
institutions are running behind time. None of them are signatory to the
UNEP Financial Initiative statement. It is time now that Bangladesh takes
some major steps to gradually adhere to the equator principles-guidelines
that use environment-sensitive parameters, apart from financial, to fund
projects.

Green Banking
Report | 54

REFEREN
CES
1. Khondokar Morshed Millat, Rubayat Chowdhury, Edward Apurba Singha, n.d.,

About Green Banking, Green Banking in Bangladesh- Fostering Environmentally

Sustainable Inclusive Growth Process, pp. 11.
2. Olaf Weber, n.d., Introduction, Sustainable Banking- History and Current

Developments, pp. 2-4.

3. Md. Maruf Ullah, n.d., Steps in Green Banking, Green Banking in

Bangladesh-A Comparative Analysis, pp. 7.

4. Pravankar Sahoo, Bibhu Prasad Nayak, 2008, Green Banking: International Initiatives,

Green Banking in India, Ser. No. 125/2008, pp. 8-10.

5. The Equator Principles 2006, Statement of Principles, pp. 2-6.
6. Khondokar Morshed Millat, Rafeza Akhter Kanta, Md. Mahfuzur Rahman

Khan et al. 2012, Bangladesh Bank Green Banking Activities Other than In-House,
Green Banking Report: March 2012, pp. 5.
7. IFC Consulting Canada Inc. 2007, Green Financial Products & Services-CuCrrent

Trends and Future Opportunities in North America, pp. 15-38.

Green Banking Report | 55