Seven banks receive cenbank's sustainability rating for 2022

Seven banks and four non-bank financial institutions have secured positions in the Sustainable Rating for 2022 released yesterday by the Bangladesh Bank for the country's banks and financial institutions on the basis of four indicators.

Brac Bank tops the list of banks in the latest Sustainable Rating, followed by Jamuna Bank, Prime Bank, Shahjalal Islami Bank, City Bank, Trust Bank, and United Commercial Bank. The leading NBFIs are ‍Agrani SME Financing, Bangladesh Finance, IDLC Finance, and Lankan Alliance Finance.

In the Sustainable Rating for 2021, 10 banks and five NBFIs were certified based on the four indicators – sustainable finance, green refinance, corporate social responsibility, and core banking sustainability.

Among them, eight banks and two NBFIs have failed to retain their position in the 2022 rating. Brac Bank and City Bank appeared in all the three lists released so far. Among NBFIs, IDLC Finance also made it to the list for the third time.

On the other hand, five banks – Jamuna, Prime, Shahjalal Islami, Trust Bank, and United Commercial, and one NBFI – Lankan Alliance Finance – are the new entrants on the list for 2022.

"If any bank falls behind, it doesn't mean they are a bad bank. Our criteria for this year's investment may have decreased, resulting in their ratings declining," Chowdhury Liakat Ali, Director, Sustainable Finance Department, Bangladesh Bank

This is for the third year the Bangladesh Bank released sustainability ratings for financial institutions.

Chowdhury Liakat Ali, director of the central bank's Sustainable Finance Department, said, "We base the sustainability ratings on four specific criteria. The banks that meet all these parameters are placed at the top of the list."

The latest ratings are for the specified year 2022, he mentioned, adding, "If any bank falls behind, it doesn't mean they are a bad bank. Our criteria for this year's investment may have decreased, resulting in their ratings declining. If they perform well again, they can regain their top position in the ratings."

He further explained that some banks are doing well overall, but if they fail to meet the specific parameters set by them, they may not be included in the top list. The top positions are reserved for those who have fulfilled the designated criteria.

The Bangladesh Bank released the Sustainable Rating for the first time in August 2021 for the previous year. At that time, ten banks were listed in the best ranking, with Al-Arafa Islami Bank being the top, followed by Hajj Finance Company Limited among other financial institutions.

Sarwar Hossain, assistant spokesperson of the Bangladesh Bank, told The Business Standard that the Sustainable Rating is released with the aim of inspiring banks and other financial institutions to maintain good governance, integrity, and social responsibility.

The sustainable rating is created based on several indicators such as CSR expenses, green finance, core banking activities, default rate, and more, he noted, adding that the rating is done with the support of multiple departments of the central bank.

Kyser Hamid, managing director of Bangladesh Finance, told TBS that his institution has achieved this prestigious recognition for the second consecutive year for maintaining excellence in core banking sustainability, sustainable finance, green finance, and CSR.

"This recognition from the central bank is the testament to our dedication to responsible financial practices, paving the way for a greener and more exclusive financial sector," he said.

Selim RF Hussain, managing director of Brac Bank, told TBS, "Brac Bank was created with the aim of providing socially responsible financing. When we started SME financing, many banks in the country did not know what SME was. We have been looking at the factors on which the Sustainable Rating is based for a long time, which is why we are at the top and hopefully, we will continue to be at the top in the future."