Thursday, 1 December, 2022
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Corporate Social Responsibility and Banking Sector’s Role

Nironjan Roy

Bangladesh Bank has recently released information on our banking sector’s role in Corporate Social Responsibility (CSR) through local news media. Bangladesh Bank usually releases information on regular activity and performance viz. deposit mobilization, loan disbursement, non-performing loan, revenue earning of banks and financial institutions. In this context, BB’s information release on banks’ corporate social responsibility is an exceptional action, what of course, has significance in the industry and society. As per information released by BB, banks and financial institutions have spent total BDT 6.73 billion on their corporate social responsibility purpose during last six months i.e. from January to June, 2022 period, what was only BDT 3.10 billion during previous six months i.e. from July to December 2021 period. Out of this total BDT 6.73 billion expense on CSR, banks have spent BDT 6.29 billion while non-bank financial institutions have spent BDT 0.43 billion. Further, out of this total CRS expenditure, BDT 4.61 billion, BDT 0.80 billion and BDT 0.50 billion have been spent on natural disaster management, education and health purposes respectively.

CSR scenario in banking sector: The above information reveals that banks and financial institutions have made good headway in their CSR role as their monetary expenditure in this sector has more than doubled, which is really a very good sign. However, this trend of CSR expenditure increases if resultant from undertaking relief operation for current year’s flood victim and / or contributing donation in Prime Minister’s relief fund may not continue in near future. Because the lion’s share of this spending has gone in disaster management purpose and nothing is this regard is mentioned in BB released information. This information further indicated that spending on CSR by banks is much higher than that of non-bank financial institutions because latter part’s spending is only BDT 0.43 billion what is 6.40%. So, it is clear that non-bank financial institutions cannot considerably contribute in their CSR. Again, BB released information reveal that only 7/8 banks have made this contribution although there are over fifty commercial banks and similarly, a handful number of non-bank financial institutions have made contribution in this sector although there are over hundred such entities.

Corporate world and CSR role: Now is the time of corporate world, so all aspects irrespective of society, politics and government are dominated by corporate operation. The politicians also make rules and regulations taking the benefit of corporate bodies into consideration. This practice is more evident in the developed world than that of developing world; however, developed world follows this in a very sophisticated means, so people can hardly visualize it. On the other hand, it is also true that corporate establishments immensely contribute in country’s economic development by dint of making investment and creating employment opportunity. Despite profit maximization being the goal, the corporate entities also play their role in different areas of the economy and country as well. In addition to spending considerable amount for CSR, the corporate establishments undertake various programs. Corporate bodies in the developed world have created branding slogans what states that they are working for community, customers and shareholders.  Therefore, CSR is now the most important topic under discussion in the corporate world. Corporate organizations in our country have also come forward and started playing their role in CSR. Since banks and financial institutions operate under specific regulatory body particularly under Bangladesh Bank, their information is stored in the centralized place, so can be periodically released for our knowledge. Other large corporate enterprises do not operate under any particular regulatory authority and therefore, their information is not centralized, so cannot be released on regular basis although we know about their role in CSR through news media.

Extending CSR role: In the present world, CSR role performed by any enterprise cannot be judged by only the amount of money spent in this area. The scope and area of CSR have now widened. In the modern corporate world, CSR makes the company a self-regulated organization. The decision and rules what can be beneficial to the society, environment, economy and the people, can be made by the organization itself. Therefore, in the developed world, the impact of CSR is very strong particularly in the society, community and on environmental aspects. Therefore, the companies performed various roles in addition to spending money. In this context, the corporate enterprises in our country are falling apart. Although some large establishments are found to have undertaken some additional programs, yet the scope and performance level is very insignificant, and we are not familiar with those activities. Now time has come to rethink and augment their role in diversified form of company’s CSR.

Four categories of CSR role: CSR role is now broadly categorized into four specific areas what include (I) ethical responsibility, (II) environmental impact, (III) philanthropic endeavors and (IV) financial responsibility. Prior to taking any decision or making any rule, the corporate establishment will deeply review its impact on country’s environment. In digital Bangladesh, office should be paperless where there will be no use of paper, ink and printer, so environment will be benefited from this paperless office. But in reality, all official desks are seen to have been piled up with massive papers and documents what not only incur additional expenses but also affect environment. As a part of widening CSR role, bank can declare their office paperless. If the entire bank cannot be brought under paperless program right now, at least one division or any department can be made paperless what can gradually be expanded to make the whole bank or office paperless. Similarly, ethical issue is now more important because for many reasons, the ethical standard has drastically degraded in our society. So, restoration of ethical value in our society is very important now and banks can play pivotal role in this area as part of their CSR. Although high standard ethical practice is almost absent in our office environment, however, beginning of its practice can ensure very standard work culture in our society. We have experienced that in the office, many seniors abusively rebuke the juniors for any simple mistake. Although all people do not follow this bad practice, yet many always do what is not the sign of congenial working atmosphere. Similarly, incidence of viewing old person’s performance with dissatisfaction and discriminatory view towards women’s performance are very common phenomenon in our office culture. Although this trend has drastically reduced nowadays, yet its presence is vigilant in our office culture. Therefore, the corporate entities can augment their ethical aspect of CSR role and thus can eliminate this bad practice from office atmosphere.  

Our banks’ future role in CSR: In our country there are many handicapped people who are hardly hired in the official work, but they also have equal right go get job, work and maintain their livelihood. Although their performance cannot be expected up to the mark of all other officials, yet they must be hired. Under widening CSR role, the corporate establishments can hire some handicapped people at every level of employment. Likewise, there are some other areas, where banks, financial institutions and other organization can extend their CSR role and thus can take their CSR performance to some extent at international standard. The Govt. will also have to come forward with some incentives to encourage country’s corporate organizations to perform CSR role to a greater extent. I am not sure whether money spent under CSR is tax exempted and if so, that is really great. If not, then some measures can be taken to allow a certain percentage of tax credit on money spent for CSR if entire amount cannot be allowed tax exempted. It is pertinent to mention here that there is difference between allowing tax exempted expense and granting tax credit on the money spent. Further clarification on these two issues requires elaborate discussion, the scope of which is limited here. In conclusion, the money spent on CSR by bank and financial institutions has been doubled what is really a very good sign. So, in addition to spending money, if country’s banks, financial institutions, and other corporate organizations play some extended role under CSR, their standard of CSR will undoubtedly reach to some extent the international level.

 

The writer is a banker, Toronto, Canada.

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