The Jahangirnagar Journal of Finance

& Banking (JJFB)

A journal of Dept. of Finance & Banking Volume-02, June 2014

The Practice of Corporate Social Responsibility in the Banking

Sector of Bangladesh

Md. Tarikul Islam1, Md. Kaysher Hamid2

ARTICLE INFO ABSTRACT

Keywords: CSR, Banking Corporate Social Responsibility (CSR), a concept of

Sector, Bangladesh, Reporting
Practice, Social Development
No of Pages: 10
engaging the company in socially responsible
behavior, is getting worldwide attention since couple
of decades. Though initially thought to be a
developed country concept, it already has made its
strong presence in the developing countries like
Bangladesh. There are tremendous encouragement
coming from CSR activities made the scenario vibrant
and CSR policy of firms is now a top issue that
stakeholders talk about. This study analyzes data
from top ten CSR performing banks from the
Bangladeshi banking sector and finds that CSR
expenditure by banks increases over time and lots of
stakeholders benefit from that. The major areas of
CSR activities include education, humanitarian and
disaster relief, arts and culture, sports, environment,
health etc. However, the reporting of CSR
expenditure is not yet perfect though the central bank
has made it mandatory in 2008. In some cases, banks
disclose qualitative information rather than
quantitative in case of CSR initiatives.

1.0. Introduction

Corporate Social Responsibility or CSR is one of the few topics that got wider
attention from both academicians and practitioners in the last couples of years.

1 Associate Professor, Department of Finance & Banking, Jahangirnagar University, Bangladesh

2 Department of Finance & Banking, Jahangirnagar University, Bangladesh

Electronic copy available at: https://ssrn.com/abstract=2979283

Thousands of researches have been done on it to know why companies go for CSR,
how companies conduct their CSR initiatives, and impact of CSR initiatives on
society. However, looking at the beginning, experts like Milton Friedman (1962) said
that CSR is not an organizational issue. Organizations are in the market to maximize
the profits through competitions, not to do any social development. In his opinions,
other parties like government should be responsible for social well being rather than
corporations. But the concepts of business and ideas about business has changed and
corporations could understand that without being socially responsible its not
possible to stay profitable in the long term. They started being in benefits of society
and environment through various activities like donation, sponsoring, development
activities, scholarships etc. Carroll in 1999 came up with the view that corporations
can become ethical and philanthropic even after being profitable which is further
proved by Hanlon’s work in 2008 which concludes that CSR does not affect the firms’
profitability in a negative way. In another study by Banerjee in 2008, he concludes
that considering the impact of corporations on society, CSR is rather narrow and
firms should focus on broader perspectives of stakeholders’ interests.

There are varied viewpoints on CSR and because of that defining CSR is a function of
who defines it. But the overall theme is similar. CSR actually drags corporations out
of their economic boundary to be socially and ethically liable and in an extreme to be
philanthropic. Rana et all in 2012 says that CSR is the firms’ commitment to
environment and community and successful fulfillment of these commitments can
make CSR a powerful tool to achieve competitive advantage (Ferdous and
Moniruzzaman, 2013). European Commission in 2011 defines CSR as the
responsibility of enterprises for their impacts on society. In its 2003 definition, World
Bank defines CSR more broadly as “the commitment of business to contribute to
sustainable economic development, working with employees, their families, the local
community and society at large to improve quality of life, in ways that are both good
for business and good for development”. According to the World Business Council
for Sustainable Development (WBCSD) (1999), CSR is the continuing commitment by
business to contribute to economic development while improving the quality of life
of the workforce and their families as well as of the community and society at large.
Fontaine (2013) describes CSR as a form of corporate self-regulation integrated into a
business model which goal is to embrace responsibility for the company's actions and
encourage a positive impact through its activities on the environment, consumers,
stakeholders, communities, public and employees as well. Ahmed in 2013 say that
CSR is not just philanthropy, rather a process with internal and external practices
where a company maintains its business with various stakeholders voluntarily by
keeping social and environmental concern in mind. However, as time passed on, CSR
has become a complex and multifaceted issue (Sharma and Mani, 2013) and emerged
as a crucial factor in the decision making process (Cochran, 2007) for firms. It
impacted businesses in such a way that throughout the last decade businesses

Electronic copy available at: https://ssrn.com/abstract=2979283

changed their approach from ‘profit maximization’ to ‘social responsibility’ (Almona,
2005). However, until recently, CSR was believed to be a developed country
phenomenon (Jamali and Mirshak, 2007) and in developing countries it was not in
focal point. Because of the socio economic scenario in the developing countries the
issue did not get that importance (Khan, 1985) too. In those countries, stakeholders
still struggle for their basic needs and the educational status is quite poor which
made the stakeholders unaware of their rights. Things changed and nowadays in a
country like Bangladesh, significant number of corporations are involved in CSR
activities with a huge amount of investment.

In Bangladesh, CSR is a new phenomenon and not yet a clear concept to the
stakeholders. Corporations are used to do some irregular CSR activities, mainly in
the form of donation. They did not report it in their annual report. Therefore, there
was not any framework for CSR activities in Bangladesh market. However, with the
Bangladesh Bank directive in 2008, a step has been taken to put the chaos in order. As
per the directive, banks now have to have a CSR policy and they have to send the
report on their CSR activities in a predefined format to Bangladesh Bank within a
month after the period expires. Therefore, the reporting has been improved
moderately (Khan, 2010) since then though not cent percent appropriate yet. Banks
and some other financial institutions are the major role players in case of CSR
activities in Bangladesh market. But other companies especially telecommunication
firms are nowadays quite active in CSR activities. Though donation in various forms
was the major form of initial CSR activity, it has been expanded to many more.
Following table (Table-01) presents a list of major forms.

Table-01: Major forms of CSR activities in Bangladesh

Category Item Sector Performing

Humanitarian Donations, gifts, and money to disaster Banks,
and Disaster relief fund Telecommunication
Education Offering scholarships, giving education Banks,
materials, donating computers to Telecommunication,
educational institutions, offering Pharmaceuticals
educational and skill development training
programs, developing online school
Health Blood donation camp, health check up Banks,
camp, donation to the treatment of Telecommunication
different diseases, pure drinking water
project, motherhood and infant care project
etc.
Sports Sponsoring various sports events Banks,
Telecommunication
Arts and Sponsoring cultural events, helping in local Banks,
Culture cultural development Telecommunication
Environment Providing solar panel, environmental Banks,
awareness campaign, beautification of Telecommunication,
cities private universities,
hospitals
Source: Annual reports and websites of firms

List in the table-01 is not an exclusive one; there are some other forms, which are
nontraditional. In Bangladesh economic growth still is the highest priority issue
(Quazi, 1994) and therefore social causes are not prominent topics here. On the other
hand, as it's an evolving concept (Alam et all, 2010) in Bangladesh, companies rather
focus other ethical obligations (Azim et all, 2011). However, with the pressure from
consumer groups, civil society, international buyers etc. (Belal, 2001), both companies
and government started to act on the issue. This research focuses on CSR activities of
banks in Bangladesh over time.

2.0. Research Methodology

With the incorporation of secondary data from various sources like annual reports,
company webpages, Bangladesh Bank publications, different journals, newspapers
etc. the study focuses on the current practice of CSR activities by the banking sector
of Bangladesh. CSR practice of top ten banks based on expenditure in 2012 is
described in details. Table-2 shows the banks selected for the study.

Table-2: List of banks selected for the study

Name of the Banks Name of the Banks

Dutch Bangla Bank Limited Trust Bank Limited
EXIM Bank Limited Agrani Bank Limited
Islami Bank Bangladesh Limited Bank Asia Limited
Prime Bank Limited First Security Bank Limited
Janata Bank Limited Mercantile Bank Limited

In all cases data for the year of 2012 has been used for the analysis.

3.0. Major Findings and Analysis

Investment in CSR activities has been increasing with rapid pace in the last couples
of years in Bangladesh. Banks lead the investment and among banks Dutch Bangla
Bank (DBBL) contributes highest amount. More details on the issues follow the next
sections.
 3.1. Bangladeshi Banking Sector, Brief Overview

Bangladesh, a 115.6 billion US dollar economy as of 2012 (ADB website, 2014),

compared to its size rather has a large banking sector. There are 52 scheduled and
four non scheduled banks in the country right now. At the beginning after
independence, this number was only eleven having six nationalized commercial
banks, two state owned specialized banks, and three foreign commercial banks. The
basic difference in between scheduled and non scheduled banks is that scheduled
banks operate under company act 1991 (amended in 2003) and non scheduled banks
are introduced for special purpose. Currently there are four non scheduled banks,
which are fully or majorly owned by the government. Among 52 scheduled banks
there are four fully or majorly state owned commercial banks. Among 35 private
commercial banks, 28 banks offer conventional banking while seven banks offer
Islami Sharia based banking. There are nine foreign commercial banks and in
February 2013 Bangladesh Bank permitted five new banks namely Union Bank
Limited, Modhumoti Bank Limited, the Farmers Bank Limited, Meghna Bank
Limited, and South Bangla Agriculture and Commerce Bank Limited to operate in
Bangladesh. This is the fourth time when Bangladesh Bank did so having the
timeline 1983, 1995, 2001, and 2013. Figure-01 is snapshot of the Bangladeshi
Banking sector.

Figure-01: Bangladeshi Banking Sector in a Snapshot

Banking Sector

Scheduled Banks Non Scheduled Banks

State Owned Specialized Private Foreign Ansar VDP Karma Probashi Jubilee
Commercial Banks commercial Commercial Unnayan shangosthan Kollyan Bank Bank
Banks banks Banks Bank Bank

In the second method of classification, experts classify the banks in Bangladesh as

first generation banks, or second generation banks, or third generation banks. It is a
classification based on the incorporation time of banks. Banks that started their
operations in between 1982 to 1988 are called first generation banks while banks that
started operations within the period of 1992 to 1996 are called second generation
banks. Third generation banks started their operations after 1998.

3.2. CSR Practice of Bangladeshi Banking Sector

Historically, banks and other financial institutions are the major investors in CSR in
Bangladesh. The issue has been reinforced since 2008 when Bangladesh Bank
published the DOS Circular No. 01 titled ‘Mainstreaming Corporate Social
Responsibility (CSR) in banks and financial institutions in Bangladesh’ in which CSR
has been defined in the following way.

“CSR is about (i) taking stock of the economic, social, and environmental
impacts of a business, (ii) mitigating the negative impacts and bolstering the
benign impacts, (iii) taking up action programs and community investments to
reduce social exclusion and inequality and to address the key sustainable
development challenges.” (Bangladesh Bank, 2008)

In that circular, for CSR activities by banks and other financial institutions,
Bangladesh Bank set some priority areas that include self-employment credit and
SME lending program, financing program for eco-friendly energy like biomass
processing plants, solar panel, credit programs for diversified production etc. In 2010,
Bangladesh Bank published the “Review of CSR Initiatives in Banks (2008 & 2009)”
for assisting banks and financial institutions better understanding their CSR practices.
And from that year Bangladesh Bank is annually publishing the review for keeping
track of the progress of CSR adaptation and practices in the banking sector. To
encourage the CSR practice, in 2011, under the SRO No 229-Ain/Aykor/2011,
Bangladesh Government announced 10% tax rebate for 20 areas of CSR activities.
These areas include donations in natural calamities, establishing and managing old
persons homes, organizations running for the welfare of mentally or physically
handicapped people, educational institutions running for the rootless children,
institutions doing projects on accommodation for the slum dwellers, grants to Public
Universities etc.

The contributions of banks in CSR expenditure has been increasing over time with a
good pace and comparing the 2012 expenditure with that of 2007, there is a growth of
1245.71%. In 2007, total expenditure amounted to Tk. 226.4 million while the amount
reached at Tk. 3046.69 million in 2012. Starting from 2007, there was a steady increase
in the CSR expenditures with a slight decrease in 2011 followed by an increase again
in 2012.

Table-3: Growth of CSR expenditure by banks over time

Year Amount (million Taka) Growth (%)

2007 226.4 --
2008 410.7 81.40
2009 553.8 34.84
2010 2329.8 320.69
 2011 2188.33 -6.07
2012 3046.69 39.22
Source: Bangladesh Bank CSR Review, 2012 and 2013

Table-3 shows the amount of expenditures and the respective growth rate over time.
In 2009 there were 24 banks officially reported their CSR expenditure while the
number reached at 47 in 2012. In 2012 DBBL contributes the highest amount to the
total CSR related expenditures followed by EXIM Bank Limited. DBBL spends Tk.
52.77 crore in 2012 and the amount from EXIM Bank Limited in the similar field is Tk.
39.90 crore. Table-4 is a representation of the relevant facts.

Table-4: Top ten banks in 2012 as per the investment in CSR

Rank Bank Amount (crore Taka)

1 Dutch Bangla Bank 52.77
2 EXIM Bank 39.90
3 Islami Bank 30.91
4 Prime Bank 29.57
5 Janata Bank 13.76
6 Trust Bank 13.02
7 Agrani Bank 10.41
8 Bank Asia 9.58
9 First Security Bank 9.04
10 Mercantile Bank 8.59
Source: Bangladesh Bank CSR Review 2013

Interestingly Trust Bank Limited which spends Tk. 13.02 crore for CSR field in 2012
and holds the sixth position based on the amount of expenditure, moves to first
position when banks are categorized based on their expenditure on CSR in terms of
percentage of after tax profits. The bank spends 71.23% of its after tax profits for CSR
initiatives in 2012. DBBL goes to the second position and new banks like BRAC Bank,
IFIC Bank, and Premier Bank make their place in top ten. Table-5 represents more
insights on the issue.

Table-5: Top ten banks in 2012 as per the CSR expenditure as % of profit

Rank Bank Percentage

1 Trust Bank 71.23
2 Dutch Bangla Bank 22.86
3 EXIM Bank 18.70
4 Prime Bank 11.04
5 First Security Bank 10.61
 6 Bank Asia 10.55
7 IFIC Bank 9.69
8 BRAC Bank 8.18
9 Premier Bank 7.99
10 Mercantile Bank 6.22
Source: Bangladesh Bank CSR Review 2013

Looking at the pattern of CSR expenditures, though the initial investment was higher
in humanitarian and disaster sector, in course of time education sector gets the
highest priority. The contribution to the sector was rising gradually and since 2011
the sector gets highest contribution from CSR expenditures. Table-6 gives more
insights.

Table-06: Contribution to CSR activities (in million Taka)

Sectors 2008 2009 2010 2011 2012

Humanitarian and Disaster 58.60 125.10 460.41 188.03 788.37
Education 30.50 94.80 400.79 612.48 983.69
Health 112.10 245.50 689.07 520.42 435.43
Sports 49.80 1.20 265.23 359.07 183.85
Arts and Culture 0.80 0.30 328.91 171.52 213.31
Environment -- -- 59.78 138.07 140.23
Others 158.90 86.90 125.58 198.73 301.81
Total 410.70 553.80 2329.80 2188.33 3046.69
Source: CSR Review, 2013

3.3. Analysis of CSR Practice by Selected Banks

Ten banks have been selected to analyze their CSR practice. The banks have been
selected based on their investment in CSR field in 2012.

3.3.1. Dutch Bangla Bank Limited (DBBL)

Dutch-Bangla Bank Limited (DBBL), a joint venture between Bangladesh and

Netherland, started its operations in Bangladesh on June 03, 1996 with a socio
economic theme. They want profit from the market but not at the expense of society.
Therefore, from the very beginning, the bank was involved in many kinds of social
activities along with the banking business. The bank is especially famous for the
social campaign on acid violence, dowry, pregnancy issues of mother etc. Today
DBBL is one of the highest contributing banks in Bangladesh focusing on social
welfare through CSR activities.
 Figure-2: Contribution of DBBL in different sectors in 2012 (in million Taka)

Source: Annuar Report of DBBL, 2012

In 2012, the bank spends Tk. 523.53 million in CSR from which education sector gets
62% of the total i.e. Tk. 324.59 million. About 94% of the money directed to the
education sector goes for scholarship at various levels like HSC, graduation, M. Phil,
PhD, and post doctorate. Two percent funds are spent on the development of
educational infrastructure while Math and Physics Olympiad claims 3% of the fund
to the education sector. In humanitarian and disaster sector, the bank supports
victims of natural calamities in their rehabilitation process. The bank spends Tk.
36.65 millions in health sector in which support goes for infrastructure development
(82%), surgeries (8%), smile brighter (7%) and donation for treatment (3%). In
addition to that, the banks contribute to the areas like awareness generation
campaign, celebration of Independence Day, celebration of victory day, Bengali New
Year celebration, cultural programs, book publication etc.

3.3.2. EXIM Bank Limited

Since August 1999, Export Import Bank of Bangladesh (EXIM) has been working in
Bangladesh market with a vision ‘Together Towards Tomorrow’ by recognizing its
accountability to the environment and society. Therefore the bank aligns its
businesses to the social and environmental goals and treats CSR as one of the core
concerns. In 2006, the bank established EXIM Bank Foundation to monitor and
control its CSR activities. The major areas that bank focuses more on include
education, humanitarian and disaster, health, employment generation, environment,
sports, and culture.

Table-7: CSR Expenditure of EXIM Bank, 2007-2012 (in million Taka)

Year Amount Growth (%) Average

2007 --
2008 19.30
2009 --
2010 231.83 138.50
2011 180.90 -21.97
2012 399.00 120.56
Source: Bangladesh Bank CSR Review, 2012 and 2013

The bank’s especial attention to the education sector is proved by its scholarship to
poor and meritorious students, donations to Madrasas and Mosques, donations to
infrastructure development of different educational institutions etc. Apart from
humanitarian and disaster sector, the bank contributes significantly to the health
sector. It has great contributions to the development and enhancement of arts and
culture in Bangladesh.

3.3.3. Islami Bank Bangladesh Limited (IBBL)

In March of 1983, as the first ever Islamic Shariah based bank, Islami Bank
Bangladesh Limited started its journey in Bangladesh. It is tremendously successful
in its business in Bangladesh that is proved by their revenues in the last couples of
years. From the beginning, the bank in its language is very much concerned about
the social welfare and it had a special division namely ‘Sadaqah Tahbil’ for that
purpose. In May 1991, the bank converted Sadaqah Tahbil into Islami Bank
Foudation (IBF). However, since July 2009 the bank performs its CSR related
activities through its Corporate Social Responsibility Division (CSRD).
Table-8: Contribution of IBBL in different sectors in 2012 (in million Taka)

Sectors Amount In %
Education 83.8 27.10
Health 39.75 12.86
Humanitarian and Disaster 87.93 28.44
Environment 12.48 4.04
Sports 1.61 0.52
Arts and Culture 8.24 2.67
Others 75.38 24.38
Total 309.19 100
 Source: Annuar Report of IBBL, 2012

As per the bank’s webpage, since 1983 till 2012 the bank contributed about Tk.
2525.74 million under CSR program to 100, 25,271 beneficiaries. In 2012, the banks
spent its maximum in humanitarian and disaster sector. In this sector, the bank
works in the areas like relief to flood affected, financial assistance to needy and
heavily indebted individuals, winter cloths to the poor etc. Education sector received
the second highest amount, which is 27.10% of total CSR expenditures for
scholarships and development of educational institutions etc. About Tk. 39.75 million
was channeled to health sector for development of hospital facilities and charitable
dispensaries.

3.3.4. Prime Bank Limited (PBL)

Prime Bank is famous for its caring attitude toward the society from the very
beginning i.e. 1995. The bank established Prime Bank Foundation to engage itself
with the various socio economic activities. Every year a portion of the net profit of
the bank goes to the foundation and in 2012 the amount was Tk. 213.41 million. The
total expenditure in CSR field by the bank in 2012 was Tk. 295.65 million that shows
that major part of the CSR program of the bank is administered by Prime Bank
Foundation.

Table-9: CSR Expenditure of Prime Bank, 2007-2012 (in million Taka)

Year Amount Growth (%) Average

2007 --
2008 --
2009 --
2010 291.42 126.53
2011 172.09 -40.95
2012 295.65 71.80
Source: Bangladesh Bank CSR Review, 2012 and 2013

Major activities of this foundation include education support program for poor and
meritorious students, Prime Campus, Prime Bank Nursing Institute, Prime Bank Eye
Hospital, Prime Bank Cricket Club etc. The foundation plans to establish a Medical
College and an international standard auditorium in near future. In addition to the
education, Prime Bank got itself engaged with other sectors like health, sports, arts
and culture, humanitarian and disaster relief etc.

3.3.5. Janata Bank Limited (JBL)

It is a state owned commercial bank that started its banking in 1971. To prove its
obligations to society, the bank performs a series of CSR activities. Among them
donation for education and research, donation to health sector, facilities for
agriculture sector, and donation for technology development are mentionable. In
2012, the bank’s contribution as CSR expenditure amounted to Tk. 113. 38 million
from which largest portion goes to health sector.

Table-10: Contribution of JBL in different sectors in 2012 (in million Taka)

Sectors Amount In %
Agriculture 5 4.41
Education and Research 28.32 24.98
Environment 0.07 0.06
Health and Treatment 34.78 30.68
Poverty reduction and rehabilitation 13.06 11.52
History, Culture, and Art 12.86 11.34
Information Technology 14.58 12.86
Others 4.71 4.15
Total 113.38 100
Source: Annuar Report of JBL, 2012

3.3.6. Trust Bank Limited (TBL)

The bank originates from Army Welfare Trust in 1999 and is now one of the leading
commercial banks in Bangladesh. The bank is pretty active in CSR related activities
and in 2009 it established ‘Trust Bank Limited Special Reserve Fund’ to deal with its
CSR programs. Board of Trustees of the bank manages this fund and every year a
percentage (not exceeding 5%) of the bank’s operating profits are transferred to the
fund.

Figure-3: Contribution of TBL in different sectors in 2012 (in million Taka)

 Source: Annuar Report of TBL, 2012

In 2012, TBL spent a total of Tk. 122.05 million as part of CSR expenditures.
Education sector got the lion share, which is about Tk. 70.75 millions. The bank has
its own Trust Technical Training Institute, which receives significant contribution
from the CSR fund. Another mentionable as well as unique program of the bank is
the establishment of ‘Proyash’. Proyash is a school for physically challenged children
and since the last few years it has contributed a lot to the welfare of the enrolled
children. Other than these, the bank contributes in the areas of hospital development,
helping families of martyred freedom fighters, donation for treatment, donation for
disastrous people etc.

3.3.7. Agrani Bank Limited (ABL)

Agrani Bank is another state owned bank that made its place in top ten by investing a
huge amount of money in CSR field. The bank started its journey in 1972 and
currently in their language doing business with a core focus on social, economic, and
cultural development of the country.

Table-11: Contribution of Agrani Bank in different sectors in 2012 (in million Taka)

Sectors Amount In %
Education 28.12 52.76
Health 8.53 16.01
Disaster Management 1.42 2.66
 Environment 0.70 1.31
Sports 2.12 3.97
Art & Culture 4.85 9.09
Others 7.57 14.20
Total 53.30 100
Source: Annuar Report of ABL, 2012

The bank has its active footstep in CSR investment and in 2012 its contribution to
CSR field amounts to Tk. 53.3 million. About 53% of the total expenditure goes to the
education sector followed by the second highest contribution to health sector. About
52.76% of the total money has been directed to the education sector for the
development of educational institutions, sponsoring different events like seminars,
conferences, and training programs etc.

3.3.8. Bank Asia Limited (BAL)

Bank Asia Limited, a third generation commercial bank in Bangladesh, is in business

since November 1999. The bank, in its version, wants to build a poverty free society
with the human rights established in it. In 2012, the bank was recognized as one of
the top 10 commercial banks promoting green banking by Bangladesh Bank. The
bank maintains its continuous efforts to ensure the sustainability of society and
environment by not compromising on these issues.

Table-12: Contribution of Bank Asia Limited in different sectors in 2012 (in million
Taka)

Sectors Amount In %
Education 18.44 26.55
Health 5.74 8.26
Humanitarian and Disaster 21.55 31.03
Environment 1.23 1.77
Sports 1.23 1.77
Arts and Culture 0.47 0.68
Others 20.79 29.94
Total 69.45 100.00
Source: Annual Report of Bank Asia, 2012

Looking at the CSR expenditure pattern of the bank in 2012, the bank focused more
on the humanitarian and disaster segment and spent highest, 31.03%, in that category.
They contributed to prime minister’s relief & welfare fund, supported the victims of
garment sector tragedy and BDR carnage, provided tube wells to the cyclone hit
areas, and distributed warm clothes among vulnerable people. Education sector
received the second highest amount, 26.55% of the total CSR expenditure, and the
money has been spent for scholarship to rural poor and meritorious students and
graduate nurses of the BSMMU. Some of the money has been put to develop
computer centers in various institutions too.

3.3.9. First Security Bank Limited (FSIBL)

The bank started its journey as private commercial bank in September 1999 and then
converted to Islami Shariah based bank in 2009. However the bank maintains its
commitment to societal development from the beginning. It gets special credits for its
diversified investment in CSR field. Every year the bank invests 5% of its profits in
CSR field.

Table-13: CSR Expenditure of First Security Bank, 2007-2012 (in million Taka)

Year Amount Growth (%) Average

2007 0.4
2008 1.0 150
2009 --
2010 43.63 36.05
2011 80.85 85.31
2012 90.41 11.82
Source: Bangladesh Bank CSR Review, 2012 and 2013

In 2012, the bank spent a total of Tk. 110.4 millions which is equivalent to 10.61% of
its after tax profits. The major CSR activities of the bank in 2012 include donation to
Rotary Kenayat Ali-Anowara Khatun Old Home (Tk. 25 Lac), Dr. SK Mazumder
Agriculture & Vocational Institute (Tk. 5 Lac), SEID trust (Tk. 5 Lac), Biswa Shahitto
Kendro (Tk. 5 Lac), Bangabandhu Sheikh Mujibur Rahman Charitable Fund (Tk. 5
Lac), Thalassemia Welfare Center Bangladesh (Tk. 1 Lac) etc. Other activities of the
bank in 2012 include scholarship to disabled poor students, donation to prime
minister relief fund, Bangabandhu Sheikh Mujibur Rahman Memorial Trust, freedom
fighters family in Jessore etc.

3.3.10. Mercantile Bank Limited (MBL)

Mercantile Bank started its journey in June of 1999 in Bangladesh. From the very
beginning the bank incorporated social theme in its policy design. In 2000, the bank
established “Mercantile Bank Foundation” to work for the distressed and disable
people and every year 1% of the MBL’s operating profit goes to this foundation.
Therefore this is one of the very few banks that from the initiation incorporate social
values in the business model. The areas of CSR for the bank include but not limited
to community outreach, health and medical research, education, arts and culture,
development of sports etc. The bank has a ‘CSR desk’ to support its CSR activities.

Figure-4: Contribution of MBL in different sectors in 2012 (in million Taka)

Source: Annual Report of Mercantile Bank, 2012

Out of its total CSR expenditures of Tk. 26.8 million, highest portion goes to the
health sector. The bank donates to Liver Foundation of Bangladesh, SEID Trust,
Rawnok Diabetes Shastha Sheba, National Heart Foundation, Naogaon General
Hospital, Nilphamari Diabetic Association, and individuals for treatment. About Tk.
17.5 million have been spent on the humanitarian and disaster field where major
activities include warm clothes distribution and helping the victims of garment
sector tragedy and BDR mutiny.

4.0. Conclusions

Overall practice of CSR by banks in Bangladesh market is pretty impressive. Talking

about banking sector only, the contributions by banks to CSR programs increases day
by day. Lots of stakeholders are getting benefited which brings two effects. In one
side involvement of stakeholders with the banks increases and in another side
organizations are working on inclusive growth, a theme where growth means
growth of all stakeholders. From the first part, organization gets benefits, as with the
positive change in stakeholders’ involvement with the banks there is a possibility of
more brand loyalty from the customers’ side followed by the maximization of
success for firms. Second part also contributes to the firms’ overall business. If the
stakeholders are happy it means a win-win situation and its good for a firm. There
would be less or no negative campaign about the firms and productivity of the
people involved in the production of firms’ product would be maximized, as they are
also happy. Table-14 says more in this regard.
Table-14: CSR expenditures of banks, 2007 – 2012 (in million Taka)

Ye DB EXI IBB PB TB AB BA FSI MB

JBL
ar BL M L L L L L BL L
200 13.
--
7 39.2 -- -- -- 9.5 6.0 8 0.4 14.6
200 171.
19.3
8 0 -- -- 5.0 1.0 -- 6.9 1.0 12.2
200 159. 116.
--
9 2 3 -- -- 46.8 3.5 1.0 -- 9.3
201 168. 231. 232. 291. 141. 40.
0 9 8 6 4 4 48.1 51.4 6 43.6 92.5
201 341. 180. 410. 172. 33.
1 8 9 7 1 57.0 81.2 57.1 4 80.9 49.4
201 527. 399. 309. 295. 137. 130. 104. 95.
2 7 0 1 7 6 2 1 8 90.4 85.9
Source: Bangladesh Bank CSR Review, 2012 and 2013

Also in the competitive business environment, banks need CSR programs to

differentiate one from another. There is a limited customer base and to reach and
gain the acceptance from these customers banks have to prove that they are caring
about their customers. The bank doing this in a better way gets more competitive
advantage.

But there are also problems with the CSR programs in Bangladesh market. For
example, not all bank report their CSR expenditures in a proper way or in a regular
basis. Therefore there is still lack of transparency. There is also no guarantee that the
reported CSR expenditure data is accurate and CSR money has been directed in the
fields as reported. It requires initiatives from the regulator in the market and
fortunately Bangladesh Bank has already launched some programs to do so. In
another scenario, there are already questions about the sustainability of the CSR
programs in the market. Do they create any capacity? Can they enhance the already
created capacity? If the capacity is created, is it sustainable? Its now proper time to
think about these questions to get maximum benefits out of the initiatives taken in
various phases by the Bangladeshi banking sector.

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