|Green Banking in Bangladesh|
Decades of inconsiderate handling of environment enticed by unbridled industrial competition have let loose a Pandora’s Box, known as “Global Warming”. Global warming, also called “Green House Effect”, is a universal issue that calls for a global retort. The warming is the effect of certain man-made gas emissions such as carbon dioxide, methane and chlorofluorocarbons (CFCs) that are found responsible for alteration of balance in the environment and climate changes. As banks play a vital role in an economic system that can affect all types of business and production activities through financing activities and thus may contribute to eradicating polluted environment, they should adopt greenness and play a pro-active role (Basically known as green banking) to consider environment aspects as part of their lending and investing principles, which would divert industries to invest for environmental management and use of appropriate technologies. So, we need to know, first of all, about green banking.
Green Banking and its objectives:
Green Banking is defined as promoting eco-friendly banking practices and reducing emitted carbon mark from banking activities. Green Banking mainly focuses on two prolonged approaches. First, it puts emphasis on green revolution of internal operations of all banks, meaning all banks should adopt proper ways of consuming renewable energy, digitalization and other measures to minimize carbon mark from banking sectors. Secondly, all banks should adopt financing in an environment-friendly way.
Generally, Green Banking exposure includes: sustainable banking, ethical banking, green mortgages, green loans, green credit cards, mobile banking, online banking etc. The main objective of green banking is to minimize filth and give importance to environment and society.
Green Banking Activities in Bangladesh:
Bangladesh, a low carbon emitting country among the developing states, is likely to be one of the worst sufferers of Global Warming. With regards to adverse effects of climate change and progressive action worldwide, Bangladesh Bank, the central bank of Bangladesh, has shown a profound commitment towards the vision of green world through green initiatives on Green Banking. Thereby Bangladesh Bank itself appears to be an illustration for the financial sector by performing some green banking activities for its head office and branch offices. These activities certainly deliver a strong message to the financial institutions about the seriousness of Bangladesh Bank in its green movement.
On the basis of CAMELS rating and Risk Based Capital Adequacy (RBCA) measurement Bangladesh Bank initially selected ten commercial banks in Bangladesh that are currently implementing green banking practices.
The Bangladesh Bank authority considered the following major activities under the Green Banking:
Green Banking Unit, Green Banking Policy, Green Banking Budget, Online banking, Mobile and internet banking, Allotment of funds in green financing, Environment risk rating.
All 47 banks (scheduled) have their own Green Banking Policy Guidelines approved by their respective Board of Directors as well as have Green Banking Unit (GBU) for pursuing Green Banking activities. They also have their own Green Banking Office Guide for conducting in-house green activities. Out of nine newly scheduled banks, six have formulated their own Green Banking Policy Guidelines and eight have formed Green Banking Unit (GBU) till the reporting quarter. Eight newly scheduled banks have prepared their own Green Banking Office Guide.
Banks’ in-house green activities:
- · Using e-statement for customers instead of paper statement.
- · Making online communications in the best possible manner.
- · Using more daylight instead of electric lights.
- · Using energy saving bulbs such as LED lights.
- · Video/audio conferencing instead of physical travel.
- · Conversion of bank’s vehicles into CNG
- · Efficient use of printer cartridges, photocopy toner, office stationary etc.
- · Sharing electric files, voice mail, and e-mail instead of paper memos.
- · Common use of table stationaries instead of individual use.
- · Use of papers on both sides.
Major challenges for green banking:
There are six major challenges ahead for green banking in Bangladesh. These are:
- · Coordination among all the concerned authorities for green economy.
- · Proper awareness and effective capacity building.
- · Need for applying a quantitative approach for a more justified rating.
- · Shifting of different categories of industry (such as Garments, Textiles, Tanneries) to a proper location.
- · Awareness of the Top Management.
In fact, Green Banking practices in Bangladesh are on the rise. Banks have profound impact on the harmonization process of environmental imbalance. Government as well as banks of Bangladesh should take proper measures in respect of Green Banking to protect our environment from being spoilt. Government should also encourage the general people about the green banking practices. The central bank should supervise commercial banks whether they are practising it. Every bank has to participate and contribute to green banking practices today to ensure a green, sustainable and healthy environment to live it.