Banks’ spending on corporate social responsibility (CSR) initiatives dropped by 33 percent in 2024 compared to the previous year, following a loan disbursement scam that shook the sector.
According to Bangladesh Bank's latest data, banks spent Tk 615.96 crore on CSR in 2024, which is 33 percent or Tk 308 crore less than the previous year.
In 2023, they spent Tk 924.32 crore in this sector. Prior to that, in 2022, the expenditure was Tk 1,129 crore. Compared to 2022, expenditure in 2024 decreased by Tk 513 crore or more than 45 percent.
According to regulations, the country's banks spend a portion of their profits on CSR activities. There is also a policy in place to ensure that CSR funds are used in the country's sustainable sectors.
But, the banks are not following the central bank's directives in this regard. Priority sectors like education and health are being neglected in the allocation of funds.
Simultaneously, expenditure in these sectors has been consistently decreasing, falling by half, as revealed in the central bank report.
These findings emerged from an analysis of the Bangladesh Bank's published report on CSR on Tuesday (April 15).
As per the existing rules, only banks that generate a net profit can undertake CSR expenditure. The percentage of profit to be spent or whether to spend at all is the bank's own decision. If they do spend, they are required to do so by the policy.
Bangladesh Bank's guidelines state that 30 percent of the total CSR expenditure of banks and financial institutions should be spent on the education sector, 30 percent on the health sector, and 20 percent on mitigation and adaptation to environmental and climate change.
The remaining 20 percent can be spent on income-generating initiatives, disaster management, infrastructure development, sports, entertainment and other sectors.
According to the report's data, the 61 scheduled banks, during the discussed period (2024), disregarded the directives and spent the highest amount, 54 percent or Tk 330.52 crore, in the 'other' sector.
Only 17.5 percent or Tk 108 crore was spent on education, 25.16 percent or Tk 155 crore on health and a mere 3.62 percent or Tk 22.36 crore on environmental and climate change mitigation.
In 2024, six banks did not spend any money on CSR. These banks are BASIC Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, National Bank and Padma Bank.
According to the rules, 14 banks ensured 30 percent expenditure in the education sector, 21 banks in the health sector, and 9 banks in the environmental and climate change mitigation-adaptation sector. Besides, 44 banks violated the policy by spending more than 20 percent in other sectors.
The report's data indicates that 8 banks did not achieve a net profit in 2023. These banks are BASIC Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, ICB Islamic Bank, Citizens Bank, National Bank, and Padma Bank. Despite not achieving a net profit, Citizens Bank and ICB Islamic Bank undertook CSR expenditure.
Thirteen banks licensed after 2013 have a condition to spend at least 10 percent of the previous year's net profit on CSR in the following year. If a bank does not have a net profit, it does not have to spend on CSR.
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Among these banks, NRB and Community Bank spent more than 10 percent last year. Padma and the new Citizen Bank, which were weakened due to various irregularities, did not do CSR in 2023 because they did not earn a net profit.
Besides, nine banks made a net profit but did not comply with the central bank's conditions. SBAC, Midland, Modhumoti, Simanto, NRB Commercial, Union, Meghna, Bengal Commercial Bank and Global Islami Bank are the banks.