TERM PAPER

ON
GREEN BANKING
AND
ITS PRACTICES IN
BANGLADESH

[Green Banking]

ID:07303125.

TERM PAPER
ON
GREEN BANKING AND ITS PRACTICES IN
BANGLADESH

Prepared For:
Mr. Mohammed Jamal Uddin

Associate Professor
Department of Finance & Banking
University of Chittagong.

Prepared By:
Md. Maidul Hayder
4th Year, BBA
ID: 07303125
Session: 2006-2007
Department of Finance and Banking
University of Chittagong.

Date of Submission: April 28, 2012

Green Banking

LETTER OF SUBMISSION
Date: April 28, 2012
To
Mr. Mohammed Jamal Uddin
Associate Professor
Department of Finance & Banking
University of Chittagong.
Subject: Prayer for accepting the term paper report.
Sir,
With due respect and humble submission, I like to state that I have completed my Term
paper report on Green Banking and its practices in Bangladesh. Though it is a new
experience, I have tried my level best to gather information about this topic. Without
sincere cooperation and proper guidance of you it was not possible for me to prepare this
report. For this act of kindness, I am grateful to you.
I would like to express my gratitude for your kind guidance in completion of the report
assigned to me. I sincerely hope that this report will meet your expectation and will serve its
purposes.

Yours sincerely

_______________
Md. Maidul Hayder
B.B.A (4th year)
ID: 07303125
Session: 2006-2007
Department of Finance and Banking
University of Chittagong.

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LETTER OF CERTIFICATION

This is to certify that Md. Maidul Hayder , ID No: 07303125,

B.B.A. 4th year, Department of Finance & Banking, Faculty of
Business Administration, University of Chittagong was being
satisfied in his term paper period duly with me.

---------------------------------

Mohammed Jamal Uddin

Associate professor,
Department of Finance and
Banking,
University of Chittagong.

Green Banking

PREFACE
Preparation of term paper report is one of the important assignments of 4th year BBA
(Hons.). Mainly our study is limited in theories. This term paper program has been
designed for the students of 4th year to acquire some practical and special knowledge.
Because it is an important thing that students have some piratical knowledge about the
current business world. In developed countries business schools give more preference to
practical knowledge. Keeping this view in mind our curriculum includes preparation of
term paper in which I had to make this report. My report actually concern about
environmentally friendly banking (Green banking).
During my preparation of report I tried to acquire the information related to concept and
current practices of Green Banking in Bangladesh. The paper also includes experts view,
evolution, policy guidelines, roles, different products and services as well as related
problems of green banking. This paper may work as guidance for different public and
private

commercial banks for adopting green banking practices in their day to day

activities.
I owe a profound sense of gratitude to my honorable teacher, Mohammed Jamal Uddin,
Associate Professor, Department of Finance and Banking, University of Chittagong, whose
continuous guidance enable me to complete this report successfully.

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ACKNOWLEDGEMENT
It was very kind desire of the Almighty that I, Md. Maidul Hayder, have completed the
assigned task within the specified time period. For the fear of soundings like a vote of
thanks speech, I could not possibly thank all of those marvelous people who have
contributed something of themselves directly in preparing this report. First of all, my
hearty thanks go to Mr. Mohammed Jamal Uddin, Associate Professor, Department of
Finance and Banking, University of Chittagong, for his perseverance and direct supervision.
Without his guidelines and valuable advices and suggestions from time to time, I would be
failed to complete the whole thing in a right manner.
I like to express my tributes and gratitude to all of my friends who directly or indirectly
give their in this regard. I am also thankful to our classmates, employees of department and
seminar librarian who helped me in various ways, without their cooperation my report cant
be prepared in time.

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EXECUTIVE SUMMARY
Sustainable development can best be achieved by allowing markets to work within an
appropriate framework of cost efficient regulations and economic instruments. One of the
major economic agents influencing overall industrial activity and economic growth is the
financial institutions such as banking sector. In a globalised economy, the industries and
firms are vulnerable to stringent environmental policies, severe law suits or consumer
boycotts. Since banking sector is one of the major stake holders in the Industrial sector, it
can find itself faced with credit risk and liability risks. Further, environmental impact might
affect the quality of assets and also rate of return of banks in the long-run. Thus the banks
should go green and play a pro-active role to take environmental and ecological aspects as
part of their lending principle, which would force industries to go for mandated investment
for environmental management,use of appropriate technologies and management systems.
This paper explores the importance of Green Banking, sites international experiences and
highlights important lessons for sustainable banking and development in Bangladesh.
However, we find that there has not been much initiative in
this regard by the banks and other financial institutions in Bangladesh though they play an
active role in Bangladesh emerging economy. Therefore, I suggest possible policy measures
and initiative to promote green banking in Bangladesh.

Green Banking

TABLE OF CONTENTS
SL. NO.
1.1
1.2
1.3
1.4
2.1
2.2
2.3

PARTICULARS
CHAPTER 1: INTRODUCTION

PAGE NO.

1
INTRODUCTION
2
OBJECTIVE OF THE STUDY
4
METHODOLOGY OF THE STUDY
5
LIMITATION OF THE STUDY
6
7
CHAPTER 2: GREEN BANKING
COMMENTS OF EXPERTS ABOUT GREEN BANKING
8
OBJECTIVES OF GREEN BANKING
10
IMPORTANCE OF GREEN BANKING
11
CHAPTER 3: GREEN BANKING PRACTICES 12

IN BANGLADESH
3.1

DRAFT GUIDELINE OF GREEN BANKING IN

3.2
3.3
3.4
3.5
3.6
3.7

BANGLADESH
GREEN BANKING IN BANGLADESH
ROLES OF GREEN BANKING
GREEN BANKING PRACTICES
AREAS OF GREEN BANKING
GREEN BANKING PRODUCTS AND SERVICES
PROSPECTS OF GREEN BANKING

CHAPTER 4: RECOMMENDATION &

13
15
16
19
21
22
23
24

CONCLUSION
4.1
4.2

RECOMMENDATION
CONCLUSION

REFERENCES

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25
26
27

CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION
The term Green Banking is now popular worldwide now-a-days. It is for stopping the
environmental degradation and making this planet habitable. The concept of Green Banking
was developed in the western countries. Green banking is a general term, which can cover a
multitude of areas from a bank being environmentally friendly to how and also where their
money is invested.
Defining green banking is relatively easy. It means promoting environmental-friendly
practices and reducing carbon footprint from banking activities. A green bank is a bank that
promotes environmental and social responsibility but operates as a traditional community
bank and provides excellent services to investors and clients. Its progressive approach to the
community and the earth makes it different from the crowd. A green bank is also called
ethical bank, environmentally responsible bank, socially responsible bank, or a sustainable
bank, and is expected to consider all the social and environmental factors.
Green banking involves pursuing of financial and business policies that are not hazardous to
environment rather help conserve environment. The broad objective of green banking is to
use resources with responsibility and giving priority to environment and society. It is more
about focusing on 'mother planet and its sustainability', shifting from a traditional approach
on 'profit' or even 'people'. Gree banking is not just another corporate social responsibility
(CSR) activity; it is all about going beyond to keep this world livable without much damage.
Green banking, which considers all the social and environmental factors, is also called
'ethical banking'. Ethical banks started with the aim of protecting the environment. These
banks are like normal banks that aim to protect the environment and are controlled by the
same authorities.

Green banking, compared to normal banking, attaches more importance to environmental

Green Banking

factors. Its aim is to provide good environmental and social business practices. It checks all
the factors before considering a loan - whether the project is environment-friendly and has
any implication on the future of people and planet. On would be awarded a loan only when
all environmental safety standards are followed.

Basically, green banking avoids as much as paper work as possible - from go-green credit
cards and go-green mortgages to all transactions done online. It creates awareness around
business people about environmental and social responsibility, enabling them to adopt
environment friendly business practices, and follows environmental standards for lending.
When a person is awarded a loan, the interest is less than normal banks because ethical
banks give more importance to environment-friendly factors - they do not operate with high
interest rates only.

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1.2 OBJECTIVES OF THIS STUDY

The main objective of this study is to know and have a clear idea about the concept of green
banking. Along of this objective some other special objectives may be exposed as under:

To know the basic concept about green banking.

To know the historical background of green banking.

To know the objectives of green banking.

To know the role of green banking.

To know the application of Green banking in various countries.

To know the present practices of green banking in Bangladesh.

To have knowledge about policy standard set by the Bangladesh Bank for the
application of Green Banking.

1.3 METHODOLOGY OF THE STUDY

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The study is based on secondary data source; collected data and information have been
processed and analyzed systematically. This term paper has been prepared by latest data to
make the study more informative and useful. Study period was only a month. The secondary
data and information were collected from

Journal.

Books.

Newspapers.

Internet (Search engine).

Bangladesh Bank Publication.

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1.4 LIMITATIONS OF THE STUDY

During the completion of this term paper, numerous problems have been encountered for the
accomplishment of the study. These problems may be termed as limitation of the study,
enumerated as follows:

Time frame for the research was very limited. The actual survey was done within a
short period.

Unavailability of written documents as require for making a comprehensive study.

Some supportive materials were not available during the completion of my term
paper i.e. PC, Internet facility etc.

Last but not the least, in many cases, up to date information is not published.

It seems to me that during completion of this report necessary and up to date information
was not possible to gathered, I think if it was possible then a fully fledged and
comprehensive report could have been made possible.

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Chapter 2

Green Banking

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2.1 Comments of experts about Green Banking

"We have to change our mindset about environmental issues for making a better future
through greening our mind," said Bangladesh Bank Governor Atiur Rahman.
"It is time to focus on protecting our planet through initiating green banking, because the
main objective of green banking is to protect environment through pursuing environmentfriendly financing policies." said Mamun Rashid, Ex. managing director of Citibank
NA.
"We need to focus on sustainable development approach because it has a close link with the
development of other sectors, banking sector can play a vital role to encourage other
industries to go green through promoting eco-friendly financing schemes says Bandana
Saha, director general for BIBM.
"The banks should prioritise loaning the sectors that promote environmental practices,
The banks can also launch green initiatives with their own business operations
through pursuing cost

cutting,

recycling of

materials

and equipment

and waste

minimisation
strategies, the financial institutions should initiate 'green office guide' to help protect the
eco-system. Use of online communication in stead of printed documents, installation of
energy

efficient

equipment,

use of filtered

water in place of bottled water and

encouraging usage of energy efficient cars are some of the examples of practicing green
business said Shah Md Ahsan Habib, director (training) of BIBM.
We are facing a negative impact of climate change though we contribute little to global
warming, so, we have to focus on adaptation and mitigation process to cope up the adverse
impacts of global warming, and green banking initiative can facilitate this process." said
Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation.

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2.2 Evolution of Green Banking

In March 2009, Congressman Chris Van Hollen in USA introduced a Green Bank Act with
the aim of establishing a green bank under the ownership of the US government. Its
objective was to offer financial support to efforts to increase efficient energy usage, and
reduce carbon emissions and environmental pollution resulting from energy creation.
Bank Technology News has recently given Citigroup the US banking giant, top honors in its
first ranking of 'America's Greenest Banks'.The award highlighted the accomplishments of
Citi's Sustainable Operations and Technology program, which includes dozens of initiatives
aimed at shrinking environmental footprints and controlling costs.
In just one example, Citi updated computer hardware across the 1,000+ Citibank branches
in North America, reducing energy costs by 15 percent a year, while improving the speed
with which it services customers.
The Financial Times of London announced the Sustainable Banking Awards last year.
UK's Cooperative Bank won the 'Sustainable Bank of the Year' award and only HSBC,
among large global banks, was a runner-up in any category.
The good news is, BRAC Bank Ltd from Bangladesh became the regional winner for 'Asian
Emerging Markets Sustainable Bank of the Year', which they are also portraying in all their
bill boards and promotion campaigns. Good news for all of us.

2.3 Objectives of Green Banking

Green Banking

 The broad objective of the Green banks are avoiding waste and giving priority to
environment and society.
Focusing on environment-friendly initiatives by providing innovative financial and
ensure sustainable development.

Using organizational resources with responsibility.

Keeping the world livable for a long period of time.
To minimize paper works as much as possible inside and outside the bank.
To achieve cost and time efficiency.

2.4 Importance of Green Banking

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The public concern at the state of the environment has been growing significantly in the last
few years, mostly due to apparently unusual weather patterns, rising greenhouse gases,
declining air quality etc. Banks hold a unique position in an economic system, and can affect
production and businesses through their financing activities.
However, if green banking simply means incurring additional costs by a bank, it might
never be accepted as common business practice by the global banking industry. Though,
positive relationship between green banking strategy and profitability has not always
been the case, there is evidence that socially and environmentally responsible banks can also
be financially successful and have growth rates similar to, or even better than, those of their
conventional competitors.
Moreover, banks that mainly do business with the depositors' money cannot avoid
responsibility to the society. When the common people take care of banks in their bad
days, banks must be made responsible to take care of the society as well.
Banks that were once seen only as profit motive institutions have been adjusting to a
more demanding market and a more socially conscious society over the last two decades.
Environmental concern is at the centre of the green banking strategy. An increasing
number of global banks around the world are going green by launching environmental
friendly initiatives and providing innovative green products.
In the long run, the trend towards green banking will be largely driven by consumer
behavior. Common people and consumers are becoming increasingly aware of the
responsible behavior of businesses.

Green Banking

Chapter 3
Green Banking Practices in
Bangladesh

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3.1 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

Green Banking

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 cofriendly 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

3.2 Green banking in Bangladesh

Bangladesh Bank, the central bank, has a greater role in shaping up a concrete guideline for
green banking practices in Bangladesh. According to central bank, each bank and
financial institution can formulate a strategy and guideline for Green Banking and Green
Financing.
The commercial banks are to develop green banking policies and show general
commitment on environment through in-house performances by December 31 this year. A
high-powered committee will be responsible for reviewing the banks' environmental
policies, strategies and programmes.
The committee will be comprised of directors from the board in case of scheduled
Bangladeshi banks and regional chief of global office and members from the top
management including chief executive in case of foreign banks. The banks will allocate a
considerable fund in their annual budget for green banking, and set up a separate green
banking unit. A senior executive should head the unit, which will report to the highpowered committee time to time. They will have to comply with the instructions
stipulated in the detailed guidelines on Environmental Risk Management. The banks will
also incorporate environmental and climate change risks as part of the existing credit risk
methodology prescribed to assess a prospective borrower. The banks should take
measures to save electricity, water and paper consumption, according to the BB
guidelines. A 'Green Office Guide' or at least a set of general instructions should be
circulated among the employees. Instead of relying on printed documents, online
communication should be extensively used (where possible) for office management.
Energy saving bulbs should replace the regular ones in branches/offices of the banks.
They should make plans to use solar energy on their premises, and encourage employees to
purchase energy efficient cars.

Green Banking

3.3 Roles of Green banking

The people of the whole world are concerned about the environmental degradation,
especially the rising of global temperature and thereby melting of glaciers and ice-berg in
the polar region and consequently rising of sea level, which will directly affect the low
lying countries of the world. The world conscious people are also concerned about the
increase of Green House Gases and Chlorofluorocarbons (CFCs) and thereby depletion of
Ozone layer. As such, every person and especially the professionals must have
greater role to check the environmental degradation.

Bankers are the important professional group who has interaction with the other groups of
people and also with general masses. They can adopt different green activities within their
in-house environment and also can initiate the protection of the air pollution, water
pollution by their clients. Bankers can finance the green projects, which are
environmental friendly and discourage the projects that damage the environment. It will be
obligatory for each person to show respect to the environmental issues. Otherwise, the
environments where the concerned person lives will be inhabitable and as whole the
country and the globe will no longer be safe place. We have to use resources
carefully and keep in the mind that the reserve of the resources is not unlimited and its
excessive use may endanger the future generation. We have to think that each of our
activity has a specific impact on the environment.

As a best creation of Almighty, we have greater role to conserve the environment,

Green Banking

maintain biodiversity, not to endanger other fauna and flora and above all a green,
healthy planet for safe and sound living of our future generations. Since banking industry is
a vital institution in the economic and business activity round the world, bankers can not
remain indifferent to this burning issue. A banker or a banking industry may address many
issues to save environmental degradation and conserve the ecological balance.

Green

banking is a good way of making people aware of global warming. Each businessman
will contribute to the environment and make this earth a better place to live and enjoy. In
addition, it is envisaged that this institution is going to work towards reducing the
country's dependence on foreign energy sources, fighting climate change

and creating additional jobs through the provision of healthier energy generation
facilities.Green finance may cover all the financial services related to the promotion and
development of green industry and green economy where the environmental benefits in
terms of reduced carbon dependency or reduced ecological scarcity are the most
significant. Green banking practices of banks are connected with both internal operation and
product ecology. Some banks are engaged in carbon offsetting, which refers to the
effort of canceling out the climate-changing effects of its own greenhouse gas emissions.
Banks, by using their commercial lending and securities underwriting, may catalyze the
necessary transition to an economy that minimizes greenhouse gas pollution and relies on
Green Banking

energy efficiency.
There is no doubt that the combined threats associated with climate change and
biodiversity loss call for a deeper commitment of resources and investment from all
stakeholders. In the endeavor of emission reduction and conservation, stakeholders have
been contributing in different ways in different countries and regions. Green banking is
just one of the initiatives by stakeholder - banks and financial institutions.

The

environmentally responsible banks do not only improve their own standards but also
affect socially responsible behavior of other businesses. The banks will have to go
for online banking by eliminating paper waste, saving gas and carbon emission,
reducing printing costs and postage expenses.

3.4 Green Banking practices

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Practices of in house Green Banking :

Waste Management:
A green banker must be cautious about wastage and waste management. We should try to
control the wastage of resources like water, gas, electricity, paper, foods etc. For example,
if we draft our letters on a computer rather than in paper, it will save millions of paper as
well as thousands of trees that provide raw materials for paper production. Similarly,
if we select a location of the branch of a bank with sufficient access to light and air, it will
save huge electricity and create a healthy environment. Wastages must be grouped like
organic and inorganic wastage. Organic materials like food, vegetables, animals etc. can be
recycled for manure, gas and electricity etc. The inorganic material like paper, bottles, pots
etc. can be recycled. Wet and degradable materials can be processed directly keeping under
the soil. The recycling materials should be disposed off at the respective disposal site and
the rotten items should be buried under the soil and as such, pollution can be protected.
Clean and hygienic environment:
A green banker will not throw any waste, bottles or packing materials here and there.
Each group of waste should be kept in a separate place, which does not pollute the
environment and all the wastes must be disposed off separately. A green banker will not spit
or cough on the floor, walls or on the road.
On line statements, emailing documents:
We must send account statements and balance confirmation etc. to the clients through
online and through email, which will save paper, time, cost and above all the environment.
We may use these technologies for our clients as well as inter bank correspondence.

Sound Pollution:
We should keep our voice low when we converse and also convince our clients maintain
this for the sake of healthy working environment in the branches.

Green Banking

Installation of solar panel in the rural branches and using high mileage vehicles or
using shared vehicles instead of personal vehicle:
Since Bangladesh is an energy deficit country we can install solar panels in all Branches as
an alternative energy source. We can also use the vehicles which consume less fuel
which will save huge fuel import of the country. We can also use big vehicles to carry the
employees of the Banks instead of personal vehicle to reduce fuel as well traffic jam inthe
roads.

Practices by the Bankers in their business area :

Financing only the green projects:
Bankers must be aware of the environmental issues and they must go for financing the
projects that do not pollute the environment. The industries that are financed by the banks
must have effluent treatment plant (ETP), recycling facilities and smoke and gas arresting
unit. The industries must not release any kind of effluents, chemicals or smoke to the
environment. Banks must not finance any dirty project that pollutes the environment.
Voluntary activities of Banks:
Banks should take initiative to make their clients aware by organizing seminar and
symposium. They can organize awareness campaign in schools and colleges. They can
participate in the tree plantation and cleanliness programmes in city areas.
Working on specific green project:
Our country has lot of problems of proper waste management, drainage and sanitation, and
affected by river pollution, water pollution by pesticides etc. Every bank can undertake
a specific green project for removal of existing polluting substances from the ecosystem.

3.5 Areas of Green Banking

Green Bank comes in many forms. Using online banking instead of branch banking.

Green Banking

Paying bills online instead of mailing them. Opening up CDs and money market accounts at
online banks, instead of large multi-branch banks.
Green Bank looks at green banking in three areas - operational, technological and client
acceptance. Banks have made improvements in the operational area such as replacing our
daily courier service with scans and electronic delivery. All employees receive paychecks
and reimbursement checks electronically.

3.6 Green Banking products and services

Financial institutions are rushing to market with new or re-packaged product and service

Green Banking

offerings from green auto insurance to innovative pro-eco mortgages

and new

sustainability-backing investment funds.

Green Deposits: Banks can offer higher rates on CDs, money market accounts, checking
accounts and savings account if customers opt to conduct their banking activities online.
Green Mortgages and Loans: A green mortgage offers better rates or terms for energy
efficient houses. Green mortgages can allow home buyers to add as much as an additional
15 percent of the price of their house into loans for upgrades including energy-efficient
windows, solar panels, geo-thermal heating or water heaters. The savings in monthly
energy bills can offset the higher monthly mortgage payments and save money in the
long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved green
mortgage that will credit you for your homes energy efficiency in the mortgage
itself. Many home improvements also qualify for the energy tax credit. Anyone undertaking
an energy-saving house project should shop around for a bank that offers a special rate for a
green mortgage or loan.
Green Credit Cards: A green credit card allows cardholders to earn rewards or points
which can be redeemed for contributions to eco-friendly charitable organizations. These
cards offer an excellent incentive for consumers to use their green card for their
expensive purchases. Imagine the millions of dollars that could be raised for worthwhile
environmental groups if green credit cards really took off.
Green Reward Checking Accounts: A product called reward checking accounts pays a
bonus rate to customers who go green. Customers can earn higher checking account rates if
they meet monthly requirements like receiving electronic statements, paying bills online
or using a debit or check card. With this banking product higher rates and eco-friendly
livings go hand-in-hand.

3.7 Prospects of Green Banking

The banking sector may also have significant impacts on biodiversity while providing
financial support to high impact sectors such as forestry, mining, oil and gas, fisheries,
Green Banking

and infrastructure. In project finance, banks may exercise their powers through assuming
roles as environmental policeman to ensure that their borrowers comply with the
environmental standards, and could enter into a partnership with different industries and
encourage companies to be more sustainable.
Regulatory enforcement by governments, pressure from the civil society and consumers,
voluntary support, and responses by the business entities are preconditions for creating a
congenial atmosphere for offering and accepting productive green banking services. A
common platform or unique approach by the policy makers and civil society groups in all
countries or regions would give the best result. However, creating a common platform
and launching a uniform approach would require major political effort by all global
economies - a tough job.Bangladesh Bank has already provided Tk 200 crore for
renewable energy in which the share of green energy would be 2 per cent in total energy.

RECOMMENDATION
&
Chapter
4
CONCLUSION

Green Banking

Green Banking

4.1 Recommendation
Bank should keep following aspects in mind while financing any projects:
1.Analyzing the project in terms of scale, nature and the magnitude of environmental
impact. The project should be evaluated on the basis of potential negative and
positive environmental effects and then compared with the without project
situation. There should be an Environmental Impact Assessment (EIA) of each
project recommending the measures needed to prevent, minimize and mitigate the
environmental negative impact before financing the projects.
2.While investing or funding the projects, the financial institutions should assess the
sensitive issues like vulnerable groups; involuntary displacement etc and projects
should be evaluated in terms of environmentally important areas including
wetlands, forests, grasslands and other natural habitats.
3.Banking institutions need to evaluate the value of real property and the potential
environmental liability associated with the real property. Therefore, the banks
should have right to inspect the property or to have an environmental audit
performed through the life of the loan.
4.Banks also need to monitor post transaction for the ideal environmental risk
management program (Rutherford, 1994) during the project implementation and
operation. There should be physical inspections of production, resources, training
and support, environmental liability, audit programs etc.
5.The next round of evaluation includes loan structuring, credit approval, credit
review and loan management. Further banks have annual audits, quarterly
environmental compliance certificate from the independent third party and also
from the government

Further the banks can introduce green bank loans and products like:
i.

Investing in environmental projects (recycling, farming, technology, waste, etc) for

example reduced-rate of interest on loans to homeowners who install a solar energy
system

ii.

Providing option for customers to invest in environmentally friendly banking

products

iii.

Investing in resources that combine ecological concerns and social concerns

Green Banking

4.2 Conclusion

There is a growing awareness among banks and financial institutions to protect the
environment and thereby save 'mother planet'. Big banks are committing large funds on a
sustainabl basis in responsible banking, creating more values for our next generation. They
are shifting forward from 'profit' to 'people' and now more importantly, to create a better
future for all. The sooner this philosophy of 'green banking' is embraced, the better it is for
all.
A good online banking system is the linchpin of reduced costs, improved performance and
competitiveness. We provide the service at no cost to our retail and business customers. The
logical progression of online banking - converting existing customers to online bill payment
- is a harder step and can require a lot of legwork. Once customers get here, there is the
chance of moving to completely electronic banking.
Environmental conservation and protection of ecological balance should be maintained
through combined efforts of multi stakeholders. The main stakeholders are businessmen,
consumers and professionals, NGOs and government organizations.
As green initiatives sweep across the globe, more and more banks have been adopting
green banking practices. Today, many banks are assessing environmental risk while
selecting a project for financing. Even as the market slows in the face of economic
upheaval, many banks are keeping a focus on green.
The positive outcomes of these green initiatives are evident in many instances. However,
these are the results of collective efforts. There is no doubt that the progress so far has been
made possible because of the substantial efforts of all stakeholders, covering banks, policy
makers, civil society organizations, international development and financial institutions,
business entities and the common people (consumers).

Green Banking

References
1.

Bangladesh Bank Info on Mon, March 28 2012 08:55 am

2. FE (The Financial Express) Report, http://www.thefinancialexpressbd.com/more.php?news_id=112054 visited on 12.4.2012; 12:20 am

3. Jeucken, M (2001) Sustainable Finance and Banking, The finance Sector and
The Future of the Planet. London, Earthscan.
4. Down to Earth, Enter the Green Rating Project (Science & Environment
Fortnight), July 31,1999.
5. Hart, Stuart. (1995), Does it Pay to be green? An Empirical Examination of the
relationship between Emissions Reduction and Firm Performance Business
Strategy and the Environment (September).

6. FE (The Financial Express) Report, http://www.thefinancialexpressbd.com/more.php?news_id=112054. Visited on 18.4.12. 8.00 pm.

7. Star Business Report, http://www.thedailystar.net/newDesign/newsdetails.php?nid=154690. Visited on 20.4.12. 1.OO am.
8. http://www.thefinancialexpress-bd.com/more.php?news_id=114842.
9. http://theindependentbd.com/business/banking/12386-green-banking-getsbangladesh-banks-support.html
10. http://www.bibm.org.bd/index.php?option=com_content&view=article&id=157&
Itemid=6
11. http://bankinfobd.com/blog/bb-draws-green-banking-roadmap. Visited on 24.4.12.
12. http://www.bssnews.net/newsDetails.php?cat=2&id=135054&date=2010-10-02

Green Banking