Banks’ spending for corporate social responsibility purposes dropped year-on-year by 61.84 percent or Tk 387.8 crore in January-June of the year 2019 as banks were suffering from liquidity crisis.
For the CSR purposes, 51 scheduled banks spent Tk 239.33 crore in the January-June period this year against Tk 627.13 crore spent in the same period last year, according to the Bangladesh Bank data released on September 9.
Bank officials said that many banks were facing liquidity crisis in this year that forced the banks to curtail their CSR spending.
Due to the crisis, spending by the banks for the purposes also fell in July-December period, 2018 when banks disbursed Tk 277.5 crore against their disbursement of Tk 417.77 crore in the same period of 2017.
Banks’ weak liquidity situation ahead of the adjustment of advance deposit ratio by this month was also reflected in their capacity to pay loans, officials said.
As a result, the private sector credit growth dropped to a six-year low (11.26 per cent) in July this year.
Of the CSR expenses, banks spent the highest (Tk 119.03 crore) for disaster management, representing 49.73 percent of their total spending.
The second highest, 23.43 percent or Tk 56.07 crore of the entities’ total CSR expenses, was for the education sector.
Apart from these, the banks spent Tk 23.68 crore for health sector, Tk 5.3 crore for cultural sector and Tk 3.34 crore for climate risk sector, among others.
Of Tk 239.33 crore spent by all the scheduled banks, private commercial banks contributed 97.58 per cent or Tk 233.55 crore, state-owned commercial banks 1.57 per cent or Tk 3.75 crore and foreign banks 0.85 per cent or Tk 2.04 crore.
Specialised banks made no contribution to the CSR sector as they were suffering from losses.
Of the scheduled banks, Dutch-Bangla Bank contributed the highest (Tk 46.64 crore) for CSR while EXIM Bank and Mercantile Bank followed the list by spending Tk 41.09 crore and Tk 15.17 crore respectively.
Besides the banks, 18 out of 34 non-bank financial institutions, majority of which were suffering from an intense liquidity crisis, spent Tk 1.05 crore for CSR activities.
However, ensuring quality of CSR expenditure of the banks has remained a matter of concern.
As per the BB’s guidelines on CSR, the banks are allowed to spend for the charitable purposes from their net profits and such spending are not mandatory instead it is participatory.
Banks can spend 30 percent of their allocated fund for education, 20 percent for health and another 10 percent for climate risk or disaster management.
The banks are allowed to spend the rest 50 percent for sectors like emergency disaster relief, promotion of environmentally sustainable output practices and lifestyles and enhancement of artistic, cultural, literary, sports and recreational facilities for underprivileged segments.
However, there is no limit on spending for such purposes.
The National Board of Revenue has selected 24 sectors to which banks can distribute CSR fund and avail tax exemption facility.