Islamic banks account for half of banking sector’s CSR spending in Jul-Dec 2023

Ten sharia-based banks accounted for half of the amount spent by the 61 banks operating in the country on Corporate Social Responsibility (CSR) during the June-December period of last year.

According to the central bank, in the last six months of 2022, all banks together spent Tk514 crore on CSR. Out of this, 10 Islamic banks spent Tk255 crore.

Among them, Islami Bank Bangladesh Limited alone accounted for Tk125 crore, and almost the entire amount has been spent on disaster management. The rest of the sharia-based banks also spent more than their allocation on disaster management.

The Islamic banks have spent Tk63 crore from their net profit after tax for 2021 and Tk192 crore from Compensation Realized A/C, doubtful income, Zakat fund and other sources.

As per central bank policy, a bank has to spend 1% of its net profit on CSR. Out of the total CSR budget, 30% can be spent on education, 30% on health, 20% on environment and climate change mitigation and adaptation.

There is scope for spending the remaining 20% on income-generating activities, disaster management, infrastructure development, sports and culture and other sectors. 

Moreover, another circular in November directed banks to donate 5% of the CSR budget to the Prime Minister's Education Assistance Trust Fund in an effort to increase its size. 

According to the central bank, nine banks have been able to ensure 30% CSR spending in the education sector and 13 banks in the health sector. Three other banks have ensured spending of 20% of their CSR budget in the environment and climate change mitigation and adaptation sector. Moreover, 47 banks spent more than 20% on other sectors.

According to central bank data, banks spent the highest amount on disaster management during July-December, accounting for 69% of total CSR expenditure or Tk353 crore.

In the first half of 2022, the banks' spending in the disaster management sector included the distribution of food and relief materials among flood-affected people in various districts, including Sylhet and Sunamganj. Additionally, they distributed blankets among cold-stricken people in various regions, including the northern part of the country. The majority of the funds were given to the Prime Minister's Relief Fund as a grant.

Tk64 crore has been spent on health and education. Besides, Tk12 crore have been spent on environment and climate change mitigation and adaptation, and Tk12 crore on sports and culture sectors.

Banks are increasing spending on CSR

Banks spent Tk1,129 crore, a three-year high on CSR in 2022, up 48% from the previous year. They spent Tk759 crore in 2021 and Tk968 crore in 2020.

Islami Bank Bangladesh and Dutch Bangla Bank secured the top positions by spending Tk327 crore and Tk69 crore, respectively, on CSR in 2022.

Besides, Exim Bank spent Tk64 crore, Premier Bank Tk50 crore and Shahjalal Islami Bank Tk34 crore. 

Bangladesh Agricultural Bank, Rajshahi Agricultural Development Bank, Citizens Bank Plc and National Bank of Pakistan have not spent any amount in the CSR sector in 2022.

According to the central bank, at the time of issuing licences in 2013, 12 banks were directed to spend 10% of the previous year's net profit after tax on CSR activities in the following year. Among them, NRB Bank, Union Bank, Meghna Bank and Global Islami Bank have been able to fulfil the conditions. The remaining eight banks spent less than 10% of their net profits.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told The Business Standard, "Our aim as a bank is not only to make profit. Our aim is to fulfil social responsibility."

He added that they are trying to increase their spending in the CSR sector to achieve this goal.