Shameful channeling of banks` CSR fund for political usages

WHILE the entire banking sector is facing multi-layer irregularities related difficulties, news media reported that the expenditure of the banks in the name of corporate social responsibility (CSR) reached at Tk 527.81 crore in 2015 against Tk 510.55 crore a year back. The CSR fund of the commercial banks are stipulated for the benefit of under-privileged section of the society but in reality lion’s share of the CSR expenditure is being disbursed at the ruling party leaders’ dictations to get favour of the government. The ill practice of CSR fund expenditure sharply contrasts the fund’s objectives and deprived the poor people. The government’s indirect control over CSR expenditure and bankers’ readiness to satisfy the government seemingly affirm that the CSR activities areunsuccessful.

Banks are under pressure to disburse CSR fund to organizations close to influential sections of the society including ruling party leaders to ‘please’ the government. A number of banks also disbursed CSR fund to the law enforcement agencies, either by donating cars or constructing buildings. Although Bangladesh Bank has a policy on the CSR, it did not monitor the banks’ CSR activities and in some cases it overlooked the banks’ CSR activities because of the connection of influential people. The central bank introduced the guidelines in 2014 after banks’ CSR fund surged to Tk 447.15 crore in 2013 from Tk 304.67 crore in 2012 and Tk 218.83 crore in 2011. As the banks frequently distribute the fund on political consideration violating the CSR policy, the central bank remains reluctant despite knowing that some banks are conducting financial crimes in disbursing CSR fund.

The BB earlier issued the CSR guidelines saying that the board of directors of the banks and non-bank financial institutions must evidently avoid any allocation in favour of any entity directly or indirectly connected with their directors, senior management members or with trustees of their CSR foundations. The banks and NBFIs will have to use 30 percent of total CSR expenditure in the education sector and at least 20 percent for preventive and curative healthcare support assistance for underprivileged segments. The CSR must be allocated for hygiene initiatives and emergency response for disaster relief, promoting adoption of environmentally sustainable output practices and lifestyle and promoting artistic, cultural, literacy, sports and recreational facilities for the underprivileged people.

The CSR expenditure could not be straightened unless the government itself directs the banks. The central bank should monitor strictly the banks’ CSR fund disbursement to ensure whether the underprivileged people are getting the benefits of the fund or not. If the allocation for underprivileged is used for privileged section of the society then the very objectives of the fund become shamefully defeated. And it is also a shame for the government and the banks.