SOUTHEAST UNIVERSITY

Report

On
Green Banking activity and compliance with Bangladesh bank
Guideline: A study on EXIM Bank and Standard Chartered Bank Limited

Course Title: Principles of Banking

Course Code: FIN 2123
Section: 9

Submitted To
Arifa Akter
Lecturer,
School of Business Studies (SBS),
Southeast University

Submitted By
Name ID
Moahammad Raisul Hasan 2015010000298
Shakil ahmmad 2015010000032
Salman Ahmmed 2015010000142
Kawser Ahmed Mukul 2015010000200

Ummey Habiba 2015010000468

Date of submission: 10th April, 2017

Executive Summary

Commercial banks are one of the key contributors in the economy of developing countries. They
act as financial intermediaries by performing the function of mobilizing the funds from one party
and lending the same to another while making a reasonable amount of profit. People and the
government itself are very much dependent on the services provided by the various banks in the
financial market. Green banking considers social factors with environmental aspects. It has
already started working well in the different countries. Fundamentally, green banking keeps
away from as much paper work as possible and relies on electronic transactions for processing.
Green banks adopt and implement environmental standards for lending. EXIM Bank and
Standard Chartered Bank are also performing green banking activities as per Bangladesh bank
guidelines. Still there are some drawbacks in implementing the different tasks of green banking
which can be developed by taking some initiatives.
Table of Contents

Chapter 1-
1.1Introduction
1.2 Objective of the study
1.3 Methodology
Chapter-2
2.1Green banking activities of the bank
2.1.1Exim Bank
2.2.2 Standard Chartered Bank
2.2Comparative analysis between the Banks
Chapter-3
3.1Findings
3.2Recommendation
3.3 Conclusion
3.4 References
GREEN BANKING
Introduction
Present world is changing rapidly to face the challenge of competitive free market economy. To
keep pace with the trend every organization needs executive with modern knowledge. In order to
compete with modern theoretical and professional knowledge in banking and all other different
institution management, we should have a proper knowledge to work in a real official
environment. Under this course, we are assigned to gather practical knowledge about working
environment and activities. That’s why we are interested to undertake this report and we believe
that it will help us to utilize our skills and talents in our future career.

Objective of the study:

The main objective of this report is to identify the initiatives that have been taken by EXIM Bank
and Standard Chartered Bank to introduce Green Banking in Bangladesh.

The specific objectives are:

 To discuss strategies and guidelines for the Green Banking and Green Financing.

 To find out how green banking works at Exim Bank and Standard Chartered Bank

 To understand and manage risks that arises from environmental concerns.

 To evaluate alternative sources of energy that is environment friendly.

Methodology
Sources of data: Secondary.
Secondary Data:
Annual reports
Newspapers and journals
Internet and various study selected reports
Analytical tools: Descriptive Statistics
Green Banking activities

Green bank means an ethical, a socially responsible and a sustainable bank. A green banker is
more than a banker, it is not an individual but a unit or a group or a team. As a regulator of
financial sector, the central bank already proved resounding success to implement the concept of
green banking in its regular activities. Besides, it also created congenial atmosphere for the
banking sector to ensure profound impact of green banking on socio-economic landscape of
Bangladesh.

Green Banking as a concept of sustainable banking practices was formally introduced in

Bangladesh on February 2011 by Bangladesh Bank. The main objective of this guideline is to
give a detail and indicative advice to all the commercial banks of Bangladesh to adopt
environment friendly financing policies as well as to take appropriate initiatives.

Incorporation of Initiating In-house

policy formulation
environmental risk environment
and governance
in CRM management

Introducing Green Creation of climate Introducing green

Finance risk fund marketing

Supporting
Disclosure and
employee training,
Online banking reporting of green
consumer awarness
banking activities
and green event

Strategy framework of Green Banking Activities, Phase I

Activities under Phase-I: EXIM Bank

As per Bangladesh Banks guideline, EXIM Bank has developed and passed a comprehensive
Green Banking Policy and taken following steps showing general commitment on environment
through in-house performance.

Policy Formulation and Governance:

EXIM Bank has formulated an environmental or Green Banking policy and strategy for approval
the Board of Directors. The Directors of the Board has assigned to the Executive Committee of
the Board to perform the Green Banking activities of the Bank. The committee is responsible for
reviewing the bank’s environmental policies, strategies and program. The committee also shall
approve a fund in the annual budget allocation for green banking. EXIM Bank has also formed a
separate Green Banking Unit or Cell having the responsibility of designing, evaluating and
administering related green banking issues of the bank. The senior executives and operational
head of different service are assigned with the responsibility of leading the unit. The above
committee is sitting in the meeting at a certain interval and analyzes the periodical progress of
Green Banking activities of EXIM Bank.

Incorporation of Environmental Risk in CRM:

EXIM Bank has incorporated Environmental and Climate Change Risk as part of the. Existing
credit investment methodology (IRG/CRG) prescribed to assess a prospective customer and
formulate/ circulate checklist for different specific sectors.

Initiating In-house Environment Management:

A 'Green Office Guide' and a set of general instructions already circulated to the employees for
efficient use of electricity, water, paper and reuse of equipment for example: Online
communication & document, double-side printing to save papers, Eco font in printing, use scrap
paper as notepads, avoid disposable cups/glasses, Installation of energy efficient electronic
equipment and automatic shutdown of computers, fans, lights, air coolers, etc. To promote the in
house practice as well as building awareness a class (at least) on each & every training course
has been included.

Introducing Green finance:

EXIM Bank has declared to prefer Eco friendly business activities and energy efficient industries
at the time of selecting/marketing investment customer. Environmental infrastructure such as
renewable energy project, clean water supply project, wastewater treatment plant, solid &
hazardous waste disposal plant, bio-gas plant, bio-fertilizer plant will be encouraged and
financed by bank. Consumer loan programs may also be applied for promoting environmental
practices among the clients. To comply with the instruction of Bangladesh Bank EXIM Bank has
allocated 2500 million Taka for installation of ETP, Projects financed having ETP(Full amount
Disbursed), Bio-gas Plant, Solar Panel, Bio-Fertilizer Plant, Habala Zig Zag Klin etc. in the
Budget for Green Banking

Creation of Climate Risk Fund:

EXIM Bank will invest in the economic activities of the flood, cyclone and drought prone areas
at the regular profit rate without charging additional risk premium. However, bank has advised to
the EXIM Bank Foundation to build/retain a Climate Change Risk Fund for distribution to the
affecting people in case of emergency. The Board of EXIM Bank has allocated an amount of 50
million Taka in Climate Risk Fund during the year-2012-2013 which is a part of CSR activities
that related to Climate Change.

Introducing green marketing:

Green marketing is the marketing of products that are presumed to be environmentally safe.
Green marketing is expected to help awareness development among common people. The Board
of EXIM Bank has allocated an amount of 50 million Taka in Marketing, Training and Capacity
Building Fund during the year-2012-2013.
Online Banking:

Online banking is a green banking. Bank is giving 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. Meantime all the branches of the Bank have included under the
system of online banking.

Supporting Employee Training, Consumer Awareness and Green Event:

Bank has taken massive program to cover its entire employee under formal training for building
awareness about Green Banking among them. Besides, issuance of circular, guideline and
arrange workshop, seminar etc. for building awareness both the employees and its customers will
be continued.

Disclosure and Reporting:

Disclosure and Reporting to Bangladesh Bank’s Green Banking Cell and others on Green
Banking Activities are in practice along with periodical upgrading the same in Bank’s websites.
Year 2012 2013 2014 2015
policy
formulation and Yes Yes Yes Yes
governance
Incorporation of
environmental Yes Yes Yes Yes
risk in CRM
Initiating In-
house Yes Yes Yes Yes
environment
management
Introducing Yes Yes Yes Yes
Green Finance
Creation of Yes Yes Yes Yes
climate risk fund
Introducing Yes Yes Yes Yes
green marketing
Online banking Yes Yes Yes Yes
Supporting
employee
training, Yes

consumer Yes Yes Yes

awareness and
green event
Disclosure and
reporting of Yes
green banking Yes Yes Yes

activities
Compliance status with Bangladesh Bank policy guidelines for green banking –EXIM bank

Budget Allocation for green banking

2012 2013 2014 2015

2600 Million Taka 3919.45 Million Taka 5249.70 Million Taka 8581.54 Million Taka

12000

10000

8000

6000 year
Taka in Million
4000

2000

0
1 2 3 4

Budget Allocation for green banking By EXIM Bank

Activities under Phase-I: Standard Chartered Bank

Policy formulations and Governance

Standard Chartered takes a long term view of the environmental consequences of its actions,
either directly from their operations or indirectly through their relationship with business
partners. They ensure to build a sustainable business that brings benefit to their
shareholders, society, the environment and local economies. The Environment and Climate
Change (“ECC”) Policy provides a framework for managing the environmental impacts
(including climate change) by establishing a set of group-wide commitments to deliver on the
ECC strategy, developed by the Group Environment Committee (“GEC”).In Bangladesh,
Country Health, Safety and Environment Committee has been reviewing green banking and
environment related initiatives and Green Banking Unit has been formed to monitor
the activities as per the Green banking regulations as well as reporting the same to
Bangladesh Bank.
Incorporation of Environmental Risk in Core Risks Management (CRM)
They recognize that their primary impact on the natural environment is through our
relationship with their customers and the lending decisions they take. Therefore:

• All lending proposals will include consideration of environmental and social issues where
appropriate.

• All lending proposals will take account of internationally acceptable environmental and social
standards or local laws and regulations where these are more stringent.

• The risks associated with both environmental and social issues will be properly recognized,
evaluated and where appropriate mitigated

• The Businesses (both Wholesale Bank and Consumer Bank) will ensure that appropriate
procedures are designed to meet these policy requirements e.g. Project and Export Finance
proposals will be assessed in accordance with the Equator Principles.

As per the above principles, they have implemented Environmental Due Diligence and have
applied the same as part of our risk assessment. Since, they have applied the Environment Risk
Ratings to 100% of the projects that are applicable for such due diligence.

In-house Environment Management

Various steps have been taken to minimize the banks direct operational impact to the
environment:

To reduce Paper usage and help save Trees:

  Green printing guideline is being circulated among staffs through internal communication
on regular basis
 Soft archival of customer documents have been introduced for electronic access and
retrieval reducing consumption of paper
 Majority of internal memos, process notes and records are in electronic form
 Efforts are underway to store transaction reports in digital form
 Internal communications are done through electronic mails. Most of the staffs have
dedicated email IDs for office use
 Printing is discouraged by observing events like „No Print Day‟
 Many customers communications are being done through emails, SMS or ATM
display instead of letter communication

To reduce energy & water consumption:

 Energy saving T5 lights has been introduced in Head-Office building. The same will be
introduced in all other buildings in phases.
 Renewable energy (Solar Power) has been introduced.
 Old Diesel Generators are gradually being replaced by new generation diesel generators
that consume less fuel.
 Catalytic Converters are being added to our Diesel Generators to reduce CO2 emission.
 Air-conditioning is centralized in most of our offices to save energy.
 Video conferencing with overseas offices and between offices in Dhaka and Chittagong
has reduced the need for physical travel.
 Self-closing water taps installed in our Head-office.

Introducing Green Finance

As part of Introducing Green Finance in Bangladesh effort, they have financed 1000 million taka
and still striving to improve their position on Green Finance.

Utilization of Climate Risk Fund

Standard Chartered Bangladesh partnered with the British Council for
“Climate4Classrooms” and “3000 miles to go” campaigns to raise nationwide awareness
on climate change issues, mostly amongst school children and teachers.

In 2012, they have observed various events related to environment issues such as Earth Day or
the Environment Day.
Introducing Green Marketing
Their Green Marketing and Products initiatives are:

1. Auto Coupon Encashment has been introduced for Sanchaypatra holders. Customers no
longer need to visit Standard Chartered branch every time for their coupon encashment.

2. Fund Transfer to Third Party Accounts has been made available through Online Banking. As a
result, customers can execute fund transfer through paperless and automated system.

3. Contact Centre (Call Centre) has been upgraded to provide improved and enhanced
phone banking services to customers over phone. The new Contact Centre system has
sophisticated capabilities. More customers will use Phone Banking services through the Contact
Centre and need not travel to the branches or use paper-based systems.

4. Users with maximum number of financial transactions within the promotion period will
get a chance to win new iPad/Netbook.

5. Their credit card customers are offered 0% interest rate for CNG conversion of
vehicles from INTRACO CNG LTD or purchase of Solar Panel from INTRACO
RENEWABLE ENERGY LTD.

6. 5 workshops have been held to promote our electronic banking services among clients. This
would improve the Green banking cause.
7. In 2012, Fund Transfer to Other bank's Accounts through BEFTN has been made
available through Online Banking for the Consumer Banking Customers. As a result, customers
can execute fund transfer through paperless and automated Online Banking over internet to
any other account in Bangladesh.

8. They have discontinued the use of Paper PINs for credit cards and debit cards saving
huge paper, printing and postage
9. Customers can pay mobile phone service providers, internet service providers, and
insurance companies through Online Banking. They are gradually expanding the list so that
their customers can do many other transactions within the comfort of their own home Online.

10. The credit card customers can subscribe to auto-bills pay services for which various
utilities payments are auto-debited from their accounts on due date.

Online Banking
Standard Chartered has been the pioneering bank in Bangladesh market in introducing
various technological developments in providing customer services to reduce paper waste,
saving gas and carbon emission, reducing printing costs and postage expenses. They take pride
in online banking achievements in Bangladesh. Some of these achievements are:

 All of their 19 branches,9 cash booths,20 financial kiosks, 94 ATMs, 3 call centers and
own offices are connected to transaction processing systems via intranet. So, 100%
of their service points (branches and other service points) are online.
 All VISA ATMs (around 4000) in Bangladesh accept their debit cards.
 As of year-end 2012, 52% customers were using internet banking. In 2013, 63%
customers were using internet banking. As of year-end 2012.77% customers were using
SMS banking services. In 2013, 73% customers were using SMS banking services.
 They are the pioneer in rolling out e-Statement in Bangladesh. They have saved 1
million sheets of paper in 2012 and 2 million in 2013 due to delivery of e-
Statement instead of paper statement to the customers.
 In 2013, they had delivered 61% of all their customer statements through email which
was 54% in 2012.
 2012 2013 2014 2015
% of total
customers using 52% 63% 66% 72%
Internet
Banking
% of total
customers using 77% 73%
SMS 95% 92%

banking
% of total
accounts 54% 81%
statements 61% 72%

delivered
through email
Paper saving due
to e-Statement 1.4 2.0 2.4 3.1
(in million sheets
of paper)
Online Banking Journey

Employee Training, Consumer Awareness and Green Event

“Health, Safety and Environment” e-learning training is mandatory for all newly joined
staffs in Bangladesh.

They have organized 4 workshops for their clients to have them acquire better knowledge
on usage of internet banking platform Straight to Bank (S2B).
On World Environment Day 2012, 5 short-films were shown on climate change and a postcard
exhibition was held showcasing the best pictures that won in the “3000 miles to go” campaign
among the staff to raise awareness on climate change.
For their Corporate Relationship Managers to have in-depth understanding on Green Finance,
they have introduced “Sustainable Finance Training”.

Year 2012 2013 2014 2015

policy
formulation and Yes Yes Yes Yes
governance
Incorporation of
environmental Yes Yes Yes Yes
risk in CRM
Initiating In-
house Yes Yes Yes Yes
environment
management
Introducing Yes Yes Yes Yes
Green Finance
Creation of Yes Yes Yes Yes
climate risk fund
Introducing Yes Yes Yes Yes
green marketing
Online banking Yes Yes Yes Yes
Supporting
employee
training, Yes

consumer Yes Yes Yes

awareness and
green event
Disclosure and
reporting of Yes
green banking Yes Yes Yes

activities
Compliance status with Bangladesh Bank policy guidelines for green banking –Standard
Chartered bank

Budget Allocation for green banking

2012 2013 2014 2015

1025.18 million taka 1809.36 million taka 3134.80 million taka 5457.61 million taka

8000

7000

6000

5000

4000 year
taka in million
3000

2000

1000

0
1 2 3 4

Budget Allocation for green banking by Standard Chartered bank

Comparative analysis between the banks

After analyzing the green banking activities of both EXIM Bank and Standard chartered bank , it
seems that both bank are performing green banking activities properly as per Bangladesh bank
guidelines.

Phase EXIM Standard

Chartered
policy formulation and
governance Yes Yes
Incorporation of
environmental risk in CRM Yes Yes
Initiating In-house
environment management Yes Yes
Introducing Green Finance Yes Yes
Creation of climate risk fund Yes Yes

Introducing green marketing Yes Yes

Online banking Yes Yes
Supporting employee
training, consumer
awareness and green event Yes
Yes
Disclosure and reporting of
green banking activities Yes
Yes

Compliance status with Bangladesh Bank policy guidelines for green banking
 year exim scb

2012 (In million (In million

taka)2600 taka) 1025.18

2013 3919.45 1809.36

2014 5249.7 3134.8

2015 8581.54 5457.61

10000
9000
8000
7000
6000
year
5000
exim
4000 scb
3000
2000
1000
0
1 2 3 4

Comparison between EXIM Bank and SCB Budget allocation for green banking
Major Findings

 After analyzing the charts, it can be said that, EXIM Bank is quite better than SCB in
terms of green banking activities.

 EXIM Bank is in the top in allocating and utilizing budget for green banking; meanwhile
SCB is in the 6Th position in allocating and budgeting for green banking according to
Bangladesh Bank’s Green Banking activities reports.

 EXIM bank is quite better than SCB in terms of Environment Risk Rating (EnvRR).
Standard chartered Bank is too better than EXIM Bank in having accounts facilitated
with online banking.
 Standard chartered Bank is too better than EXIM Bank in having accounts facilitated
with Internet & Mobile/SMS Banking. In fact, SCB ranked the top position in this service
according to Bangladesh Bank’s Green Banking activities report.

 The both banks try to set-up according to green banking guidelines but still they are far
away from their practices.
Recommendations

 For more improvement of green banking activities the following measures may be taken:
Both banks should apply better level of Green Banking Activities & Environmental Risk
Management Systems.

 Both banks may arrange more ATM’s in bigger cities with proper solar energy backups.
In this case, SCB is doing better than EXIM Bank. So EXIM Bank should emphasize in
this sector.

 Both banks should ensure Proper Communication System and Maintenance of

Machineries.

 According to the legal framework of green banking, EXIM bank should concentrate to
prevent pollution from paper, gas, electricity or to close down or have to make necessary
investment to comply with the standard. On the other hand, SCB has already shown all
this activities in their Disclosure report.

 Both banks may maintain the record of the consumption of water, paper, electricity
energy etc. of the offices and branches to minimize pollution and environmental risk.

Conclusion

EXIM Bank and Standard chartered Bank both are going well. Though there are some drawbacks
in implementing the different tasks of green banking manually, it can be overcome through the
involvement of more experts in decision making process and utilizing the tools to judge integrity
of the customers. Finally it can be argued that through the results achieved so far are quite
satisfactory, still the banks can use some modern scientific tools for enhancing their strength and
there lies the opportunities to make it more effective in the future for their own benefit.
References

Export Import Bank Limited, Annual report,

Standard chartered Bank Limited, Annual report,

Green Banking Activities - Bangladesh Bankwww.thedailystar.net/news/green-banking-gets-

warm-response-bb
Green Banking practices in Bangladesh - IOSR journals iosrjournals.org/iosr-jbm/papers/Vol8-
issue3/G0833944.pdf