Green Banking Practice in Bangladesh

A case study on Shahjalal Islami Bank Ltd, Mirpur

Branch, Dhaka

Date of Submission: July 28, 2012

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 Green Banking Practice in Bangladesh
A case study on Shahjalal Islami Bank Ltd, Mirpur
Branch, Dhaka

Submitted To
Sabrina Akhter
Lecturer
Department of Real Estate
Faculty of Business& Economics
Daffodil International University

Submitted By
Summia Parvin
ID NO. 083-11-567
Bachelor of Business Administration (BBA)
Faculty of Business& Economics
Daffodil International University

Date of Submission: July 28, 2012

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 Letter of Transmittal

July 28, 2012

Sabrina Akhter
Lecturer
Department of Real Estate
Faculty of Business& Economics
Daffodil International University

Subject: Submission of the internship report on Green Banking Practice in

Bangladesh: A case study on Shahjalal Islami bank Ltd.

Dear Sir / Madam

It is my great pleasure to submit my internship report on “Green Banking Practice in
Bangladesh: A case study on Shahjalal Islami bank Ltd.”. I have completed my
internship during the period from March to May, 2012.

The entire report is based on my practical experience in the Shahjalal Islami bank Ltd.”. I
have put my best effort in completing the report with all the information that I have
collected during my stay at the Shahjalal Islami bank Ltd.”.

I have a great hope that the report will meet your expectation and aid you in getting a
clearer idea about the subject.

Sincerest gratitude for your illuminating guidance.

Sincerely yours

…………………..
Summia Parvin
ID. No. 083-11-567
Bachelor of Business Administration
Faculty of Business& Economics
Daffodil International University

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 Letter of Authorization

I, Summia Parvin, ID: 083-11-567, a student of BBA program, Department of Business

Administration, Faculty of Business and Economics, Daffodil International University,
hereby declared that the presented internship report on “Green Banking Practice in
Bangladesh: A case study on Shahjalal Islami bank Ltd.” is prepared by me after
successfully completion of an internship program.
I hereby solemnly declare that the work presented in this report has been carried by me
and has not been previously submitted to any university for an academic qualification or
degress.
The work I have presented does not breach any copyright.
I further undertake to indemnify the university against any loss or damage arising from
breach of the foregoing obligation.

………………………….
Summia parvin
Program: BBA
Batch:21st
Major in finance
Daffodil International University

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 Letter of Approval

This is to certify that, Summia Parvin, ID No# 083-11-567, program: B.B.A , batch:21st
Major in finance is a regular student of Department of Business Administration, Faculty
of Business and Economics, Daffodil International University, she has successfully
completed her internship program In Mirpur branch of Shahjalal Islami Bank Limited,
Dhaka and has prepared this Internship report under my direct supervision. Her assign
internship topic is “Green Banking Practice in Bangladesh: A case study on
Shahjalal Islami bank Limited. I think that the report is a worthy of fulfilling the
partial requirement of B.B.A.program.
.
I wish her happiness and every success in life.

………………………….
MS. Sabrina Akhter
Lecturer
Department of Business Administration
Faculty of Business& Economics
Daffodil International University

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 Acknowledgement

Firstly I would like to convey my gratefulness to the Almighty for giving me the ability
and patience to work hard successfully. I am also grateful to my honorable teachers who
encouraged me to reach the goal.

I am not have been successful in complete the report without the active support and
cooperation from many persons in the Shahjalal Islami bank Ltd.

I have tried my best and also worked hard for preparing this report. I have received
whole-hearted cooperation from my Internship supervisor Amir Hossain Sorkar manager
of Shahjalal Islami bank Ltd. of Mirpur Branch who advice me and also guided me.

I also want to express my strong gratitude to my honorable teacher and my internship

supervisor Sabrina Akhter for his enthusiastic cooperation and supervision during the
preparation of the report. I am grateful to him for his suggestions and all instance
observations to prepare the report.

I would also like to thank to the officials of Shahjalal Islami bank Ltd. Mirpur Branch
especially Mokammel hossain, Deputy Manager, Jun E Alam Senior officer and a very
special thanks goes to Amer Hossain Sorker manager of Shahjalal Islami bank Ltd. of
Mirpur Branch for providing all the support in the organization. Special thanks go to the
respondents, who spared their time generously, and took the trouble of answering my
queries and helped me to complete my study.

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 Executive Summary

Green banking, also known as a social, an ethical bank, alternative, civic, or sustainable
bank, is a bank concerned with the social and environmental impacts of its investments
and loans. Ethical banks are part of a larger societal movement toward more social and
environmental responsibility in the financial sector. This movement includes: ethical
investment, socially responsible investment, corporate social responsibility, and is also
related to such movements as the fair trade movement ethical consumerism, boycotting,
etc. Ethical banking is a juvenile sector within this movement. Other areas, such as fair
trade, have comprehensive codes and regulations to which all industries that wish to be
certified as fair trade must adhere. Ethical banking has not developed to this point;
because of this it is difficult to create a concrete definition distinguishing exactly what it
is that sets an ethical bank apart from conventional banks. Ethical banks are regulated by
the same authorities as traditional banks and have to abide by the same rules. In this
report at first I tried to summarize an overview of SJIBL. Then I tried to define definition
of green Banking, history and background of green banking. In the middle of our report,
I motivated by our study to describe about the importance, major areas, products of green
banking. Then I give various initiatives taken by internationally, nationally to implement
green banking. Then we tried to describe the green banking policy of SJIBL. I also give
some findings of report. In conclusion I describe the advantages of SJIBL to use Green
Banking as an instrument to reach the 16 core people of Bangladesh. Because one of the
major economic agents influencing overall industrial activity and economic growth is the
financial institutions such as banking sector. 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. Finally this paper tries
to draw picture how Sustainable development can best be achieved by allowing markets
to work within an appropriate framework of cost efficient regulations and economic
instruments.

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1.1 Introduction

Deforestation, dissertation, flood, soil erosion, siltation, sedimentation, river bank

erosion, increased evaporation, Co2 emissions, rising sea-level, displacement, cyclones,
Stalinization, arsenic contamination are most burning word in the present world. And all
words are related natural disaster and climate change. Because, climate change is the
most complicated issue the world is facing. Across the globe there have been continuous
endeavors to measure and mitigate the risk of climate change caused by human activity.
Another name of this attempt is “Sustainable Development” to us. The process of
sustainable development involves all sectors in the economy – Government, NGOs,
corporate, citizens and, of course, the financial sector. Our beloved mother land
Bangladesh is one most affected country by this climate change. And Bangladesh
banking industry is ahead one step from other financial institutions for taking endeavors
to measure and mitigate the risk of climate change caused by human and banking
activity. This activity is familiar in banking industry with title of “Green Banking”.

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1.2 Origin of the Report

Management of any business of any business activity requires so much expertise from
the part of its employees. To keep pace with the new trend financial institutions & other
organization need executive with modern knowledge. The knowledge should have some
practical experience also. To fulfill this requirement most of the departments has been
introduced a three month internship program as an indispensable part of BBA program.
The authority of Daffodil International University authorizes me to do a practical
orientation at Shahjalal Islami Bank Ltd.

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1.3 Scope of the Report

Scope means area of operations or field of the study. The scope of this report was
extended to the Green Banking activities of Bangladesh and Shahjalal Islami Bank
Limited.

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1.4 Objective of the Report

The objectives of the study are as follows:

 To know the basic concept and objectives of green banking.

 To find out and evaluate the services and performance of green banking practice
in Bangladesh

 To identify the green baking services of SJIBL

 To evaluate the performance of green banking practice in SJIBL

 To identify the problems of green banking practice and recommend some

suggestions for overcoming the problems.

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1.5 Methodology of the Report.

This is an exploratory type of research. Information collected to furnish this report is

both from primary and secondary sources. The overall process of methodology has been
given below:

Primary Sources of Data:

 Officers of Shahjalal Islami bank Ltd

Secondary Sources of Data:

 Annual report of Shahjalal Islami bank Ltd.
 Website of Shahjalal Islami bank Ltd.

Method of data collection:

 Face to face interview method

Target population:
 Officers of Shahjalal Islami bank Ltd

Sample Size:
 Four officers and twenty six foreign exchange clients select to take
interview.

Sampling Technique: Convenience sampling

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1.6 Limitations of the Report

 The respondent may be uninterested to answer the questions.

 Time will be a major constraint in accumulating all sorts of information in an

organized way.

 Confidentiality of data will be another key barrier that will be faced during the
conduct of this study. As every organization has their own secrecy that is not
revealed to others, so acquiring the absolute raw information will be a difficult
and almost impossible task for me.

 Large-scale research will not be possible due to constraints and restrictions of

both time period and by the organization as well.

 Green Banking Technology is newly come to our country, so, there is no accurate
information available.

 The information sources regarding this study are not so much large. It would be
more correct if the study conduct with large information sources.

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Background of the organization

Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in

accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank
Companies Act, 1991. During last eight years SJIBL has diversified its service coverage
by opening new branches at different strategically important locations across the country
offering various service products both investment & deposit. Islamic Banking, in
essence, is not only INTEREST-FREE banking business, it carries deal wise business
product thereby generating real income and thus boosting GDP of the economy. Board of
Directors enjoys high credential in the business arena of the country, Management Team
is strong and supportive equipped with excellent professional knowledge under
leadership of a veteran Banker Mr. Muhammad Ali. Name of the Company Shahjalal
Islami Bank Limited Legal Form A public limited company incorporated in Bangladesh
on 1st April 2001 under the companies Act 1994 and listed in Dhaka Stock Exchange
Limited and Chittagong Stock Exchange Limited. Commencement of Business 10th May
2001.

2.1 SJIBL’s Vision

To be the unique modern Islami Bank in Bangladesh and to make significant contribution
to the national economy and enhance customers' trust & wealth, quality investment,
employees' value and rapid growth in shareholders' equity.

2.2 SJIBL’s Mission

To provide quality services to customers.

To set high standards of integrity.
To make quality investment.
To ensure sustainable growth in business.
To ensure maximization of Shareholders' wealth.

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 To extend our customers innovative services acquiring state-of-the-art technology
blended with Islamic principles.
To ensure human resource development to meet the challenges of the time.

2.3 SJIBL’s Strategies

To strive for customers best satisfaction & earn their confidence.

To manage & operate the Bank in the most effective manner.
To identify customer’s needs & monitor their perception towards meeting those
requirements.
To train & develop all employees & provide them adequate resources so that the
customer’s needs are reasonably addressed.
To promote organizational efficiency by communicating company plans, polices
& procedures openly to the employees in a timely fashion.
To cultivate a congenial working environment.
To diversify portfolio both the retail & wholesale markets.

2.4 SJIBL’s Motto

Committed to Cordial Service.

2.5 Shariah Council

Shariah Council of the Bank is playing a vital role in guiding and supervising the
implementation and compliance of Islamic Shariah principles in all activities of the Bank
since its very inception. The Council, which enjoys a high status in the structure of the
Bank, consists of prominent ulema, reputed banker, renowned lawyer and eminent
economist.

Members of the Shariah Council meet frequently and deliberate on different issues
confronting the Bank on Shariah matters. They also conduct Shariah inspection of
branches regularly so as to ensure that the Shariah principles are implemented and
complied with meticulously by the branches of the Bank.

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2.6 SJIBL’s Deposit Schemes

 Mudaraba Monthly Income

 Mudaraba Double Money
 Mudaraba Monthly Deposit
 Mudaraba Millionaire
 Mudaraba Haji Deposit
 Mudaraba Housing Deposit
 Mudaraba Small Business
 Mudaraba Cash Waqf Deposit
 Mudaraba Lakhopoti Deposit
 Mudaraba Bibaho Deposit
 Mudaraba Mohor Deposit
 Mudaraba Shikhkha Deposit

2.7 Account services:

 Al Wadiah Current Deposits (ACD)

 Mudaraba Saving Deposits (MSD)
 Mudaraba Term Deposits (MTD)
 Mudaraba Short Notice Deposits (MSND)

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3.1 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
environment- friendly 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 priorities 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 minimization strategies, the financial institutions should initiate 'green office
guide' to help protect the eco-system. Use of online communication instead 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.

3.2 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

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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.

he 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.

3.3 Objectives of 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.

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3.4 Importance of Green Banking

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

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behavior. Common people and consumers are becoming increasingly aware of the
responsible behavior of businesses.

4.1 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

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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 e -finance scheme.

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4.2 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 programs.

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
high-Powered 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

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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.

4.3 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, maintain biodiversity, not to

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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 cannot 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 energy efficiency.
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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.

4.4 Green Banking practices

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

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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 interbank
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.

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 in the roads.

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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.

4.5 Areas of Green Banking

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

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4.6 Green Banking products and services
Financial institutions are rushing to market with new or re-packaged product and service
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

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the long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved
green mortgage that will credit you for your home’s 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.

4.7 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, 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

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crore for renewable energy in which the share of green energy would be 2 per cent in
total energy.

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Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in
accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank
Companies Act, 1991. During last eight years SJIBL has diversified its service coverage
by opening new branches at different strategically important locations across the country
offering various service products both investment & deposit. Islamic Banking, in
essence, is not only INTEREST-FREE banking business, it carries deal wise business
product thereby generating real income and thus boosting GDP of the economy. Board of
Directors enjoys high credential in the business arena of the country, Management Team
is strong and supportive equipped with excellent professional knowledge under
leadership of a veteran Banker Mr. Muhammad Ali. Name of the Company Shahjalal
Islami Bank Limited Legal Form A public limited company incorporated in Bangladesh
on 1st April 2001 under the companies Act 1994 and listed in Dhaka Stock Exchange
Limited and Chittagong Stock Exchange Limited. Commencement of Business 10th May
2001.

Phase- 1:

A separate Green Banking Unit or Cell will be established having responsibility of

designing, evaluating and administering related green banking issues of the bank. A senior
executive should be assigned with the responsibility of heading the unit. The unit will
report to the high powered committee time to time.

5.1 Incorporation of Environmental Risk in CRM:

SJIBL has adopted ERM Guidelines as per DFIM Circular No.4 dated April 6, 2011
issued from of Financial Institutions and Markets of Bangladesh Bank. SJIBL shall comply
with the stipulated in the detailed guidelines on Environmental Risk Management (ERM) in
consideration of a part of the Green Banking Policy. The Bank has already
incorporated Environmental and Climate Change Risk as part of the existing credit risk
methodology (CRG) adopted to assess a prospective borrower. This will include integrating
environmental risks in the checklists, audit guidelines and reporting formats. All of this will
help mainstream Environmental Risk that cover possible of Environmental Risk such as
Land use, Climate change related events (cyclone, drought), animal diseases/pathogens such
as avian influenza, solid waste including waste feed, animal waste, carcasses, sediments,

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wastewater discharges, hazardous, materials, etc will be reviewed under Environmental Due
Diligence (EDD) checklists.

5.2 Initiating In-house Environment Management:

SJIBL shall prepare an inventory of the consumption of water, paper, electricity, energy etc.
by its offices and branches in different places. Then it will take measures to save electricity,
water and paper consumption. A 'Green Office Guide' or at least a set of general instructions
will be circulated to the employees for efficient use of electricity, water, paper and reuse of
equipment’s.

5.3 Green Office Guide:

The guide comprises of the following instructions:

In place of relying on printed documents, online communication will be extensively

used (where possible) for office management to reduce use of paper along-
with making unnecessary duplicates of same document.
Make sure that the printers are defaulted to duplex for double-side printing to save
papers.
Bank will apply Eco-font in printing to reduce use of ink,
Use scrap paper as notepads
Avoid disposable cups/glasses to become more eco-friendly.
Installation of energy efficient electronic equipment’s
Installation of 'Power save Mode' of computers and ensuring shutdown of
computer while not using and leaving the office place.
Ensuring switching-off fans, lights, air coolers etc., while not using and leaving the
office place that will help reducing electricity consumption.
Energy saving bulbs should replace normal bulbs in branches/offices of the banks.
issues should be taken steps to save energy from corporate business travel and
Employees are encaged to avoid using vehicle to reduce gas and petroleum
consumption
Minimum utilization of electric bulb in day-time
Minimum utilization of AC during the rainy season and winter.
Avoiding use of electric appliance during peak SJIBL.
Keeping the temperature level of AC not below 20 degree centigrade.
Avoiding wearing of coat-tie during summer to lessen use of AC.
Encage clients of take e-statements
Encage the clients to use ATM cards instead of Cheque-Books.
Advertising through electronic media avoiding the print Medias.

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 Tele-Conference and Video conference should be arranged to avoid travels and
reduce use of fossil fuel.
Reduce wastage of water
Reduce wastage of tissue papers.

5.4 Creation of Climate Risk Fund:

Bank will finance the economic activities of the flood, cyclone and drought prone areas at
the regular profit rate without charging additional risk premium. However, banks will
assess their environmental risks for financing the sectors in different areas for creating a
Climate Change risk Fund with the approval of the Board of Directors. This will be used
in case of emergency. The bank would ensure regular financing flows in these
vulnerable areas and sectors. The fund could be created as part of bank's CSR expenses.

5.5 Introducing Green Marketing:

Green marketing is the marketing of products that are presumed to be environmentally

safe. Green marketing incorporates a board range of activities, including product
modification, changes to the production process, packaging changes, as well as
modifying advertising. It refers to the process of products and/or services based on
their environmental benefits. Such a product or service may environmentally friendly in
itself of produced and/or packaged in an environmentally friendly way.

I. To make advertisement through electronic media (Radio, Television)

II. In the advertisements clients would be encaged to use ATM cards
instead of cheque books and let them know that is how they are
protecting their environment for their future generation.
III. Through advertisement the clients will be encaged for the following
E-Banking (E-Transaction, E-Statement)
Tele-Banking
On-line Banking
SJIBL Green Finances

5.6 Online Banking:

SJIBL will undertake bank transactions or paying bills via the Internet on a secure
website that will allow the customers to make deposits, withdrawals and pay bills. SJIBL

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shall give more emphasis to make the easiest way to help environment by eliminating
paper waste, saving gas and carbon emission, reducing printing costs and postage
expenses.

Phase -II:

5.7 Sector Specific Environmental Policies:

The Bank will formulate strategies to design specific policies for different
environmental sensitive sectors such as Agriculture, Agri-business (Poultry & Dairy),
Agro farming, Leather (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, Ship Breaking etc.

5.8 Green Strategic Planning:

The Bank will determine green targets to be attained through strategic planning. A set of
Achievable targets and strategies will be determined and those will be disclosed in the
annual report and website for green financing and in-house environment management.
For in-house environment management, the target areas should cover attaining energy
efficiency in the form of the use of renewable energy, reduction of electricity, gas and
petrol consumption, reduction of Green House Gas emissions, issuance or e-statements,
electronic bill pay, saving papers, environment friendly office building etc. For green
financing, the target areas should cover reducing loans for certain environmentally
harmful activities, attaining a particular percentage of environmental loans as
percentage of total, introducing eco-friendly financial products etc.

5.9 Improved In-house environment management:

Strategy of re-use, re-cycling of materials and equipments, and SJIBL reduction and
waste minimization strategy will be, part of in-house environment management. Banks
will increasingly rely on virtual meeting through the use of video conferencing in lieu of
physical travel which will help saving cost and energy.

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5.10 Formulation of Bank’s specific environmental risk
management plan and guidelines:

Bank will develop and follow and an environmental risk management manual or
guidelines in their assessment and monitoring of Projects and Working Capital
investment. In addition to the compliance of national regulation, the will set
internationally accepted higher environmental standard. In this connection, SJIBL will
be involved in the Green Initiatives to be taken by a group of Banks.

5.11 Rigorous programs to educate clients

Business houses will be encaged and influenced to comply with the environmental
regulations and undertake resources efficient and environmental activities. The Bank
will introduce is program to educate clients. Considering the responsibility of making
the clients well aware of issues the Bank will implement the following programs:

Messages for protecting environment in SJIBL all sorts of Marketing and

Promotional Activities.
Focusing on environmental issues while selecting investment clients and
communicates its importance by setting Environmental Risk as a deciding factor.
Making the bank's website as an important tool that we are doing Green
Banking and making SJIBL clients green as well. The Website will be used for
societal movement towards more social and environmental responsibilities in the
financial sector.
Inviting clients in seminar, symposium and other celebration program where
facts, figures and pictures will be exhibited regarding how the environment is
deteriorating and how are activities can prevent those for SJIBL sustainability.
Bank will promote socially/environmentally-geared investment clients by
recognizing them as their green clients.

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MIRPUR Branch at a Glance
SJIBL established its 23rdBranch in Mirpur-10 at 01-11-2001. The Branch is banking
with various types of account holders of deposit accounts as well as investment accounts.
We have a mentionable amount of SBIS, HDS, and RDS investment in our branch. Huge
number of foreign deposit accounts is also here.

MSS deposits are also increasing day by day. There are some valued investment clients
who want to get specialized service. On the other hand, the other Banks situated in this
area like Dhaka Bank, Uttara Bank, Sonali Bank etc. are offering various products,
specialized service with advanced technology to attract the clients. In such situation, it is
the time-need for our Branch to provide sufficient manpower, to update digital programs
& other logistics support in order to deliver prompt & up to date banking service, to

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reduce untold pressure of voluminous works, to achieve the targeted goal & to survive in
the 21st century competition.

Qualitative INTERVIEW AND answer:

I took a survey from Employees in Mirpur branch, the summery of that survey given
bellow.
1st question was Do Shahjalal Islami Bank Mirpur Br. Invest on “Solar power”
or “Eligible for renewal power” or any “alternative power source” to save
environment?
 All the employee give same answer that they do not have these type
investment yet but SJIBL has.

2nd Question was “Does Mirpur br. has any investment rate waiver for
environment saving Project?”

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  Different employees give different answer. This may cause them not
practicing that much Green Banking function. And another reason that
one of employee of investment department told “they do not get any
application that can fully satisfy “environment saving project”. If they get
any of this type application for investment, they would consider
investment rate waiver as per rules of head branch.

3rd question was “Do you have any tree plantation programme?”
 This time all employee give similar answer that they have this type
programme.

4th question was “Do you provide any training to your partners or buyers for
environment saving activities?”
 Maximum employee told they do not directly provide any training to
them but they provide guideline and make sure that applicant got
certificates from “Department of Environment” of Bangladesh.

5th Question was “Does this Br. Have any policy about Green banking?” –
 All the employee ensure that The Mirpur branch have Green Banking
Policy.

6th Question was “What steps are taken for saving papers as well as tress?”
 Collective answer is “we are trying to preserve our documents in CD
other than hard copy. Printing in both side of a single page and printing
ink quality always economy mode or less color.”

7th Question was “Give me some information about SJIBL green banking
activities” Collective answer is :-
i) Before investing any investment to any industry, we investigate whether these
remain any treatment plant or not
ii) Branch wise we always preserve our documents through CD.
iii) We now introduced Remittance card to people
iv) We are now encouraging people to use ATM cards and ATM service.

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 v) We are conducting different seminars for make people aware for using ATM
cards, Mobile banking service, Internet services, online banking as well as
Green Banking.
vi) We gave tree to our account holder as our tree plantation programme.
vii) We are working with farmers for helping them.
viii) Our entire task is accomplished through network and fast.
ix) A team investigates where the invertors doing well or not according to
investment contract in regular basis.
x) Investing on renewable energy and advising and working with entrepreneur to
ensure green banking.
xi) Maintain all rules and regulation that Bangladesh Bank declared for Green
Banking.

8th Question was “Would you please tell about some green baking activities of
Mirpur Br.”
 Answer is “employees of MIRPUR Branch are advice to make aware all
the clients about reducing Gas consumption, pollution and other wastage
of other resources. This branch now trying to increase ATM, Mobile
banking, internet banking services and trying invest in environment
friendly projects.

9th Question was “Future Planning for Mirpur Br. about green banking”
 Answer for these question is “N/A” or “it is subject to head office or top
class officer” mainly this may not their sector but they told they have a
program to reach to 16 crore people of Bangladesh. And there will be no
need to have any branch service. All the funtion will be done by using
internet or mobile from their own living place.

Final and 10h Question was “Some recommendation that ShahjalalIslami Bank ltd. can
do for batter practice of “Green Banking”
 Answer is :
I. Bank should establish internal recycling system for recycling its
wastage.
II. Ensure the proper utilization of internal resources
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Green Banking performance of Mirpur Branch

Total Number of ATM card User of Mirpur branch 750

Total Number of Mobile Banking service User 50
Total number of clients of Mirpur clients 1500
Amount of avg. daily transaction of Mirpur branch 15,00,00,000
Amount of avg. daily transaction of Mirpur br. By using ATM cards 1,50,000
Amount of avg. daily online transaction of Mirpur branch 1,50,000
Amount of avg. daily transaction of Mirpur br. By using Mobile banking 50,000
Amount of investment on Agricultural sector 1,50,00,000

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Findings
The report findings about green banking policy of Mirpur of SJIBL and SJIBL are given
below:
1. A big portion of Mirpur Branch’s investment is invested transport sectors, which
is one of the main contributors to pollute Dhaka City &MIRPUR Branch has a
great scope to do green banking.

2. They have very low performance in ATM service, online service, and internet
service

3. . Maximum numbers of Employees are not aware about Green Banking.

4. Mirpur Branch’s a large portion goes to brick field and the branch incumbent is
motivated to install Zig-ZagChimne in their brick fields. Also to create awareness
among the clients, this branch organized seminar sometimes.

5. Before investing in any project they only consider on what “Department of

Environment of Bangladesh” (পররিববেশঅরধিদপ্তরি). gave certificate or not; and do the
applicant have adequate mortgage property or not.

6. SJIBL are now offering student’s accounts. That is a good idea but they just
offering minor students and guardian of those students are mainly operating this
account. But SJIBL should focus specially on Student not Minor. Because they
are now most advance and using advance technology

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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, and
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

Page 42
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

Page 43
sustainable 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.

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).

REFERENCES
E-Books:
1. R.N. Dash, 2008, “Sustainable ‘Green’ Banking: The Story of Triodos Bank”

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 Available at: www.scribd.com/doc/37388173/Sustainable-Green-Banking
2. Jan Willem van Gelder, (2006), “Sustainable Banking in Practice: A closer look at
the nominees for the 2006 Financial Times Sustainable Banking Awards”,
Banktrack.,Profundo.

Available at: www.accman.in/images/j11/Green_Banking_ (2).doc

3. Jeucken, M (2001) “Sustainable Finance and Banking, The finance Sector and
The Future of the Planet”. London, Earthscan.

Available at: www.accman.in/images/j11/Green_Banking__(2).doc

4. PravakarSahoo, Bibhu Prasad Nayak, 2008, Green Banking in India

Available at: teriin.academia.edu/bibhuprasadnayak/.../Green_Banking_in_India

5. Dr. K.A. Goyal and Vijay Joshi, 2011, A STUDY OF SOCIAL AND ETHICAL
ISSUES IN BANKING

INDUSTRY
Available at: www.ijeronline.com/.../Vol%202%20issue%205/ijer20110205SO(5)
6. Green, C.F. (1989). Business Ethics in Banking. Journal of Business Ethics 8(8)
p. 631-634.
Available at: www.academicjournals.org/AJBM/PDF/pdf2011/18Jan/Safakli.pdf
7. UNEP Finance Initiatives, 2002, Financial Institution Initiative Signatories,

Available at” http:/unepfi.net/fii/signatories_country.htm

Web links:
i. http://en.wikipedia.org/wiki/Ethical_banking
ii. http://en.wikipedia.org/wiki/Ethical_banking
iii. http://www.Greenbankreports.com
iv. http://www.Bangladesh-bank.org/greenbankingorder
v. http://greenbankreport.com/eco-friendly-banking/what-is-green-banking/
vi. http://www.thedailystar.net/newDesign/news-details.php?nid=149676
vii. http://www.accountingtools.com/dictionary-remote-deposit-capt
viii. http://www.investopedia.com/terms/o/onlinebanking.asp
ix. htpp://www.bb.org.bd/mediaroom/circulars/brpd/jan302011brpd01e.pdf
x. http://www.bb.org.bd/mediaroom/circulars/brpd/feb272011brpd02e.pdf
xi. http://www.banktech.com ; and so on…
xii. http://www.thedailystar.net/newDesign/latest_news.php?nid=32672
xiii. http://www.thefinancialexpress-d.com/more.php?page=detail_news&date=2012-
02-07&news_id=97263

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Acronyms or Abbreviations

ADB : Asian Development Bank

CO2 : Carbon dioxide

EE : Energy Efficiency

Govt : Government

IIDFC : Industrial and Infrastructure Development Finance Company Ltd

IFC : International Finance Corporation (of the World Bank Group)

SME : Small and Medium Enterprises

UNDP : United Nations Development Programme

WB : World Bank

EE : Energy Efficiency

GEF : Greenhouse Gases

IIDFC : Industrial and Infrastructure Development Finance Company Ltd

IFC : International Finance Corporation (of the World Bank Group)

REER : Real Effective Exchange Rate

UNDP : United Nations Development Programme

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