Green Banking and Its Present Status in

Bangladesh along with Bangladesh Bank Policy

Course title: Strategic Banking
Course no: FNB 406


Submitted To:

Md. Alamgir Hossen
Lecturer & Course teacher




Submitted By:






BBA Program,Batch-02




Name Students ID
Rajesh Paul 617
Savar, Dhaka-1342
July 16, 2014
Department of Finance & Banking
Jahangirnagar University



Concept of Green Banking
Green banking in general refers to the efforts of the Banking sector to keep the
environment green and to minimize greenhouse effects through rationalizing their
strategies, policy, decisions and activities pertaining to banking service, business and
in-house operational activities. Green banking may be seen as a component of the
global initiative from Banks end to save environment. Green banks or environmentally
responsible banks do not only improve their own standards but also affect socially
responsible behavior of other business.




















Importance of Green Banking operations:
Banks can help environment through automation and online banking.
Green banking focuses on social safety and security through changing the
negative impacts of the society.
In financing, it always gives priority to investments / loans which consider risk
factors regarding environmental conditions.
It always cares for sustainable and green growth in industrialization and for
social purposes.
It creates a congenial atmosphere inside and outside the bank.
It considers the clients as its family members, and as such, guide and supervise
the projects to reduce pollution and thus implement scientific methods in the
real sense by implementing environmental due diligence (EDD) checklist.
It reduces cost and energy, thus saving money and increasing GDP of a
country.
It changes the mental faculties of the officials and customers, in line with green
sensibilities.
It creates mass awareness regarding healthcare, environment and pollution.
Due to IT support in all respects, it significantly reduces mass gathering, energy
and cost-related adversities.
It helps green plantation and reduces pollution throughout the country. Banks
may play a pivotal role by reducing and prohibiting credit risk against unethical
activities by unruly industrialist of the country.
It helps institutions, men and the nation in general live with dignity.






Draft guideline of Green banking in Bangladesh
Bangladesh Bank (BB) has prepared a draft policy guideline for introducing green
banking this year in line with global development and response to the
environmental degradation. The guideline, posted on the central bank web site,
outlines a three-stage roadmap for green banking, requesting public feedback by
January 25, 2011.
The guideline, in the first phase, suggests all banks to develop green banking policies
and establish separate green banking cells and incorporate environmental risk
management strategies by June 30 this year. In this phase, the banks are also
advised to introduce green and create climate risk funds to finance flood, cyclone
and drought prone areas at regular interest rate without charging additional risk
premium.
Promoting eco-friendly products, supporting training and events for raising awareness
for environmental risk management are also suggested to include in the regular
activities of the bank in the next six months.
In the second phase, the draft suggests banks to take specific policies by June 2012
for different environmental sensitive sectors such as agriculture, poultry, dairy,
farming, tannery, fisheries, textile and apparels, renewable energy, pulp and
paper, sugar and distilleries, construction and housing, engineering and basic metal,
chemicals, rubber and plastic industry, hospital/clinic, chemical trading, brick
manufacturing and ship breaking. During this period, all banks will also set up
green branches to use maximum natural light, renewable energy, energy saving
light bulbs and other equipments. During the same period, they will have to
determine a set of achievable targets and strategies, and disclose these in their
annual reports and websites. They will have to set up green branches. The banks
should increasingly rely on virtual meeting through video conferencing.
According to the draft guideline, banks in the next one year will adopt a green
strategic plan, determining their target for green banking. The draft says a system of
environment management should be in place in all banks before they step into the
third phase of green banking, to be completed by June 2013.
In this final stage, banks will focus on fine tuning of their green activities and will look
for more innovative products and services to expand eco-friendly business and
industries.
Commercial banks will have to adopt a comprehensive green banking policy
by December 2013 as part of the central bank's efforts to make banking
practices more responsible to social and environmental causes. The central bank will
name top ten banks for their overall performances in green banking, and will take
into account to give it permission to open new branches. In its policy guideline for
green banking, the BB said co-friendly business activities and energy efficient
industries should get preference in financing by the banks. The banks will have
to inform the BB of their initiatives on a quarterly basis within 15 days after the end
of a quarter. The first quarterly report has to be submitted by July 15, 2011.Besides
avoiding negative impacts on environment through banking activities, the banks are
expected to introduce environment friendly green products to address the core
environmental challenges of the country.
The commercial banks will now require taking measures to protect environmental
pollution while financing a new project or providing working capital to the existing
enterprises. The guidelines advised the banks to facilitate their clients with utmost care
in opening letter of credit for installation of effluent treatment plant (ETP) in the
industrial units. They were also asked to finance in solar energy, biogas, ETP and Hybrid
Hoffman Kiln (HHK) in brickfield under BB efinance scheme.














Green Banking Activities of Banks
(As per the report of Bangladesh Bank published at March 2014)

Policy Formulation and Governance:
All 47 banks (scheduled before 2013) have their own Green Banking Policy Guidelines
approved by their Board of Directors/Competent authority and have Green Banking
Unit (GBU) for pursuing Green Banking activities. They also have their own Green Office
Guide for conducting their in-house green activities.
Out of 9 new banks, 2 have formulated their own Green Banking Policy Guidelines
and none has formed Green Banking Unit (GBU). 2 new banks have prepared own
Green Office Guide.

Allocation and Utilization of Fund for Green Banking Activities:
Out of Tk. 171,606.12 million for green banking activities, banks have allocated Tk.
170,286.78 million for green finance, Tk. 956.25 million for climate risk fund and Tk.
363.09 million for Marketing Training and Capacity Building. This allocation has been
made on annual basis.
37 banks have utilized Tk. 78,859.96 million (up to March 2014) for green banking
activities. Out of which, Tk. 78,693.82 million for green finance, Tk. 146.83 million for
climate risk fund and Tk. 19.31 million have been utilized.
Only one (NRB Bank Limited) of the new banks has allocated and utilized fund for
green banking in the reporting quarter. It has invested Tk. 90 million in green finance.

Major Green Banking Activities at a Glance in March 2014:
Green Banking unit has been established in 47 banks.
47 banks have introduced a Green Office Guide.
Environmental Risk Rating has been done for 9,191 projects.
7,115 rated projects have been financed.
361,665.73million taka has been disbursed against rated projects.
315 branches and 187 ATM/SME unit offices are powered by solar energy.
4,525 branches have been facilitated with online coverage.
Taka 78,693.82 million has been disbursed as green finance.
Taka 146.83 million has been utilized from climate risk fund.
Taka 19.31 million has been utilized for green marketing, training and
development

References
1. Bangladesh Bank Info on Mon, March 28 2012 08:55 am
2. FE (The Financial Express) Report, http://www.thefinancialexpress-
bd.com/more.php?news_id=112054
3. FE (The Financial Express) Report, http://www.thefinancialexpress-
bd.com/more.php?news_id=112054.
4. Star Business Report, http://www.thedailystar.net/newDesign/news-
details.php?nid=154690.
5. http://www.thefinancialexpress-bd.com/more.php?news_id=114842.
6. http://theindependentbd.com/business/banking/12386-green-banking-gets-
bangladesh-banks-support.html
7. http://www.bibm.org.bd/index.php?option=com_content&view=article&id=1
57&Itemid=6
8. http://bankinfobd.com/blog/bb-draws-green-banking-roadmap
9. http://www.bssnews.net/newsDetails.php?cat=2&id=135054&date=2010-10-
02
10. www.bb.org.bd/pub/quaterly/greenbanking/greenbanking_dec2013.pdf
11. www.bangladesh-bank.org/mediaroom/circulars/.../apr112013gbcsrl01.p...
12. www.bangladesh-bank.org/mediaroom/.../aug112013gbcrd04e.pdf
13. www.bangladesh-bank.org/.../greenbanking/greenbanking_mar2014.pdf