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: Sample Size: Four officers and twenty six foreign exchange clients select to take interview. Officers of Shahjalal Islami bank Ltd

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 SJIBLs 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 SJIBLs 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 SJIBLs Strategies

To strive for customers best satisfaction & earn their confidence. To manage & operate the Bank in the most effective manner. To identify customers needs & monitor their perception towards meeting those requirements. To train & develop all employees & provide them adequate resources so that the customers 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 SJIBLs 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

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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.

2.6 SJIBLs 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) Page 16

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

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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. 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. Page 18

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.

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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.

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 Page 20

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 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 Page 22

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 Page 23

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. Page 24

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 Page 25

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 Page 28

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 ecofriendly 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 Page 29

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, Page 31

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 equipments.

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 alongwith 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 equipments 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.

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 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.

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. Page 33

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 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:
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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.

5.10 Formulation

of Banks

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 Page 35

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

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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? 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 Page 38

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. Page 40

II.

Ensure the proper utilization of internal resources

Green Banking performance of Mirpur Branch

Total Number of ATM card User of Mirpur branch Total Number of Mobile Banking service User Total number of clients of Mirpur clients Amount of avg. daily transaction of Mirpur branch Amount of avg. daily transaction of Mirpur br. By using ATM cards Amount of avg. daily online transaction of Mirpur branch Amount of avg. daily transaction of Mirpur br. By using Mobile banking Amount of investment on Agricultural sector 750 50 1500 15,00,00,000 1,50,000 1,50,000 50,000 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 Branchs 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 Branchs 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 (). gave certificate or not; and do the applicant have adequate mortgage property or not. 6. SJIBL are now offering students 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 ii. example reduced-rate of interest on loans to homeowners who install a solar energy system Providing option for customers to invest in environmentally friendly banking products Page 43

iii.

Investing in resources that combine ecological concerns and social concerns

Conclusion
There is a growing awareness among banks and financial institutions to protect the Page 44

environment and thereby save 'mother planet'. Big banks are committing large funds on a 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: Page 45

1. R.N. Dash, 2008, Sustainable Green Banking: The Story of Triodos Bank 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. iii. iv. v. vi. vii. viii. ix. x. http://en.wikipedia.org/wiki/Ethical_banking http://www.Greenbankreports.com http://www.Bangladesh-bank.org/greenbankingorder http://greenbankreport.com/eco-friendly-banking/what-is-green-banking/ http://www.thedailystar.net/newDesign/news-details.php?nid=149676 http://www.accountingtools.com/dictionary-remote-deposit-capt http://www.investopedia.com/terms/o/onlinebanking.asp htpp://www.bb.org.bd/mediaroom/circulars/brpd/jan302011brpd01e.pdf http://www.bb.org.bd/mediaroom/circulars/brpd/feb272011brpd02e.pdf Page 46

xi. xii. xiii.

http://www.banktech.com ; and so on http://www.thedailystar.net/newDesign/latest_news.php?nid=32672 http://www.thefinancialexpress-d.com/more.php?page=detail_news&date=201202-07&news_id=97263

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Acronyms or Abbreviations
ADB CO2 EE Govt IIDFC IFC SME UNDP WB EE GEF IIDFC IFC REER UNDP : Asian Development Bank : Carbon dioxide : Energy Efficiency : Government : Industrial and Infrastructure Development Finance Company Ltd : International Finance Corporation (of the World Bank Group) : Small and Medium Enterprises : United Nations Development Programme : World Bank : Energy Efficiency : Greenhouse Gases : Industrial and Infrastructure Development Finance Company Ltd : International Finance Corporation (of the World Bank Group) : Real Effective Exchange Rate : United Nations Development Programme

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