Banks’ CSR spending falls to 8-year low

Banks‍‍` spending on corporate social responsibility (CSR) activities fell to an eight-year low in 2024 as the pressure to provide finance from higher-ups declined following the political changeover in August

Banks spent Tk 615 crore last year, down 33 percent year-on-year, according to Bangladesh Bank data.

This was the second consecutive year that spending by banks for CSR purposes declined since the highest spending of Tk 1,142 crore was registered in 2022.

Despite that, almost half of the funds were spent on disaster management, such as the distribution of blankets among the poor during winter and relief and food among flood victims.

The central bank‍‍`s latest data showed that CSR spending by banks amounted to Tk 307 crore in the July–December period of 2024, 49 percent of which went to disaster management.

In the first half of 2024, banks spent 45 percent of Tk 309 crore on disaster management, with a good amount going towards blankets and various funds maintained by the Prime Minister‍‍`s Office before the political changeover on August 5.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said banks had to give a major portion of funds to various foundations and the prime minister‍‍`s fund during the previous government‍‍`s tenure.

This was because of pressure from higher authorities, he said.

"That pressure has reduced in the changed context, especially in the last five months," Rahman added.

The central bank has been publishing CSR spending reports since 2015.

Prior to that, it had prepared an indicative guideline for CSR expenditure and end-use oversight for banks, allowing them to spend a portion of their net profit on CSR.

The Bangladesh Bank has a provision requiring banks in the country to spend 60 percent of their CSR funds on education and healthcare, with 30 percent allocated for each sector.

It has also suggested that banks allocate 20 percent of their CSR funds for schemes that support climate change adaptation and mitigate its impact.

However, the central bank‍‍`s latest publication showed that banks are far from complying with the directive on spending for education.
During the July–December period of 2024, banks spent an average of only 14.5 percent of their CSR funds on education. However, 27 percent of their CSR spending was for healthcare, such as providing financial support to the poor and helpless, clinical services, and the free distribution of medical items.

Meanwhile, central bank data showed that banks spent 4.89 percent on disaster management and climate risk mitigation during the period.

The remaining Tk 161 crore, or 53.55 percent, was spent on other categories.

The report said private banks contributed 92 percent of the total CSR spending in the July–December period, followed by state-owned commercial banks and foreign banks.

Shah Md Ahsan Habib, a professor at the Bangladesh Institute of Bank Management, said spending by banks on CSR activities is a kind of philanthropy.

He also said that banks‍‍` CSR funds are highly misused, as various vested quarters have used them for personal gain over the years.

"From that perspective, if the funds are spent effectively even after the drop, I don‍‍`t mind," he added.