Cenbank recognises 10 banks, 2 NBFIs as sustainable financial institutions

Ten private commercial banks and two non-banking financial institutions (NBFI) have been recognised as sustainable financial institutions in the Bangladesh Bank's Sustainability Finance Report 2024.

This year's top-rated banks include BRAC Bank, City Bank, Dutch-Bangla Bank, Eastern Bank, Jamuna Bank, Mutual Trust Bank, NCC Bank, Prime Bank, Pubali Bank, and Shahjalal Islami Bank.

Among them, BRAC Bank, City Bank, Eastern Bank, Jamuna Bank, Mutual Trust Bank, and Prime Bank also featured in the central bank's 2023 rankings.

Meanwhile, Exim Bank, Trust Bank, United Commercial Bank (UCB) and Uttara Bank, listed in 2023, have been excluded from this year's list.

In the non-banking sector, IDLC Finance and IPDC Finance have retained their positions in the sustainability ranking report for the second consecutive year.

The central bank evaluates institutions based on five key indicators – Sustainable Finance Index, Corporate Social Responsibility (CSR) activities, financing of green projects, Core Banking Sustainability Index, and Banking Services Coverage.

Of these, the Core Banking Sustainability and Banking Services Coverage indicators account for 60% of the total score. Banks with strong risk management, adequate capital and low non-performing loan (NPL) ratios tend to score higher.

Key metrics include net NPL ratio, tier-1 capital to risk-weighted assets, provision maintenance, share of CMSME loans and exposure in large loan portfolios.

The Banking Services Coverage component, which carries a 10% weight, assesses branch distribution, number of active deposit and loan accounts, and the extent of agent banking networks.

Bangladesh Bank introduced the sustainability rating system in 2020 to encourage financial institutions to incorporate Environmental, Social and Governance (ESG) practices into their operations.