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Amid the ongoing economic turbulence and constrained money flow, Islamic banks further slashed their spending on corporate social responsibility (CSR) activities in the first quarter of 2024.
CSR expenditure by the banks during the January-March period of this calendar year reached Tk 0.85 billion -- a massive decline of 34.11 per cent compared to Tk 1.29 billion spent in the previous October-December quarter of 2023, according to Bangladesh Bank (BB) data.
This latest fall follows a downtrend in the first half of 2023. CSR spending by Islamic banks saw a nearly 30.95 per cent drop during the first half of last year compared to the same timeframe in 2022, according to BB data.
A top executive at a private commercial bank previously said constrained cash flow was contributing to the CSR decline.
The executive said that "many banks are resorting to borrowing, indicating financial strain".
His attribution aligns with the overall CSR downward trend in recent years. For instance, CSR spending in 2021 amounted to Tk 2.75 billion -- down from Tk 3.44 billion in 2020.
As of March 2024, 10 full-fledged Islamic banks were operating with 1,672 branches. The Islamic bank branches across the country represent nearly 15 per cent of the total banking branches.
Besides, 31 Islamic banking branches from 15 conventional commercial banks and 646 Islamic banking windows by 16 conventional banks further contribute to Islamic financial services in the country.
Islamic banks allocate funds for their CSR activities from several sources. These include Zakat (mandatory charitable giving), compensation charges levied on defaulting investment clients and other Shariah-compliant sources of income.
These CSR funds are directed towards different initiatives such as education, training, healthcare and local charitable organisations.
The central bank in its latest report recommended that Islamic banks strengthen their CSR efforts to drive socio-economic development.
Bangladesh Bank data shows that total deposits in the Islamic banking system reached over Tk 43.94 billion at the end of March 2024 -- a slight decrease of Tk 39.38 billion or 0.89 per cent compared to December 2023.
Meanwhile, total investments (loans & advances) stood at more than Tk 45.69 billion at the end of March 2024.
Zafar Alam, managing director and CEO of Social Islami Bank Limited (SIBL), said although their CSR spending has increased this fiscal year, the environmental initiatives by the bank remain limited.
According to the SIBL CEO, the bank is now supporting flood-stricken communities in Sylhet.
Looking ahead, he expressed optimism about the Islamic banking sector's future CSR performance.