CSR initiatives for socioeconomic development  

Previously business entities were established only for profit generation and enhancement. As this changed over the years, now, corporate entities have some obligations towards society, besides generating profit for themselves. These obligations fall under Corporate Social Responsibility (CSR).

More and more private sector companies are leaning about CSR initiatives. The involvement of banks especially with such initiatives has increased remarkably. The CSR activities by banks were first initiated by foreign banks as part of their regular practice in and obligations towards the host country, Bangladesh.

At this time, almost all the banks have CSR projects. They are directly engaged in CSR projects or are donating to various charity and relief funds as part of their CSR campaigns.

A positive change came about after the Bangladesh Bank, the regulatory authority for the banking sector of Bangladesh, issued a circular on June 1, 2008. The circular highlighted the need for CSR, CSR expenditure, CSR governance, CSR reporting and financial inclusion in a bid to ensure CSR activities by commercial banks and Non-banking Financial Institutions.

The CSR activities of banks are divided into two parts: internal and external CSR activities. External CSR helps establish relationship and responsibility of business with society. External CSR is involved with different donations to charity and relief funds of the government, scholarship programmes, contributing to social organisations, community development programmes and awareness-generating projects.

Internal CSR indicates the role of business in sustainable development for employees of the organisation. Moreover, internal CSR consists of employee development programmes, code of conduct, human resources practices, environmental safety and healthcare for employees and more.

Social and environmental CSR activities are visible to outsiders and stakeholders while internal CSR is not visible to the same groups of people. Most commercial banks of the country are investing a lion's share of their CSR funds in education support programmes. Other popular CSR areas of banks are beautification of city roads and infrastructure, sponsorship of sports, health care, donation to various government funds, community development, talent hunt programmes for various sector, social welfare etc.

As advised by the Bangladesh Bank, a certain portion of any bank's profit is kept aside as CSR fund which is later used and disbursed for the welfare of society. The CSR initiatives of different banks have helped improve overall cost of living index of citizens in the country.

While CSR initiatives of banks are increasing, there is no specific guideline for disbursement of CSR funds. For the development of underdeveloped sectors of society, the regulatory authority can introduce a specific guideline. Subsequently, the government can establish an authority for monitoring CSR activities of different organisations.

Mir Mahmudul Haque Chowdhury is a

banker & researcher

[email protected]