Assignment on Bank Management (BBA Course) of Green Banking in Bangladesh

1. INSTITUTE OF BUSINESS ADMINISTRATION
JAHANGIRNAGAR UNIVERSITY
ASSIGNMENT ON
Green Banking
Submitted To:
Md. Alamgir Hossen
Assistant Professor
Course Instructor
Bank Management- [FIN 401]
SubmittedBy:
Fara Ul Fath
Class ID: 2215
Batch: 26
Reg. No:45971
Date of Submission
23 June, 2019

2. Table of Contents
Introduction of Green Banking or Sustainable Banking............................................................................. 3
Importance of green banking ..................................................................................................................... 3
Advantages of green banking .................................................................................................................... 3
Regulation of central bank for green banking............................................................................................ 4
Green banking products ............................................................................................................................ 4
Present condition of green banking ........................................................................................................... 5
References ................................................................................................................................................ 6
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3. Introduction of Green Banking or Sustainable Banking
A green bank is a financial institution that uses innovative financing techniques and market development
tools in partnership with the private sector to accelerate deployment of clean energy technologies
(En.wikipedia.org, 2019).
Importance of green banking
Legal Risk: There is a relevant environmental legislation risk for banks if they do not comply with it.
More particularly, there is more lender liability risk for paying up the claims and the cost of damages for
pollution causing to the asset or depraved.
Reputation Risk: As now there is more awareness about the safetyofenvironment and banks may loosen
up their reputation if they involve with the big project, which are indulging in the environmental
destruction. Reputation risk is involved in both ethically and economically.
By adopting the green banking strategies bank can deal with these risks (Newbusinessage.com, 2019).
Advantages of green banking
Lower Energy Costs
Green Bank financing helps deploy clean energy solutions that can lower energy bills for consumers and
businesses with no upfront cost
Driving Private Investment
The Green Bank concept is based on the reality that the public sector alone cannot supply the amount of
capital needed to rapidly transition to a clean energy economy. Therefore, the Green Bank is designed to
drive and ultimately rely on private sector investment
Economic Development and Job Creation
energy projects must be built locally, which means local businesses and jobs will be created to serve the
increasing demand for clean energy.
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4. 1. Avoids paper work.
2. Creating awareness to business people about environment.
3. Sanctioning loans at comparatively lesserrates.
Regulation of central bank for green banking
1. Bank shall formulate and adopt broad environmental or Green Banking policy and strategy
approved by their Board of Directors.
2. Bank shall approve a considerable fund in their annual budget allocation for green banking.
3. Banks are required to establish a separate Green Banking Unit having the 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.
4. Banks shall comply with the instructions stipulated in the detailed guidelines on Environmental
Risk Management (ERM) in consideration of a part of the Green Banking Policy.
5. Bank shall incorporate Environmental and Climate Change Risk as part of the existing credit risk
methodology prescribed to assess a prospective borrower.
6. Banks shall prepare an inventory of the consumption of water, paper, electricity, energy etc. by its
offices and branches in different places. Then it should take measures to save electricity, water and
paper consumption.
7. Banks should make plan to use solar energy at their premises to save electricity.
8. Bank should take steps to save energy from corporate business travel and encourage employees to
purchase energy efficient cars. (Bb.org.bd, 2019)
Green banking products
1. Green mortgage,
2. Home equity loans,
3. Green commercial building loans,
4. Green car loans,
6. Green project finance,
7. Green securitization,
8. Green venture capital and private equity,
9. Green fiscal funds,
5. Green cards. 10. Green investment fund etc.
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5. Present condition of green banking
Issue Bank NBFI
Number of banks/FIs having Sustainable Finance unit 57 33
Number of banks/FIs having Green banking policy 57 33
Number of banks/FIs having Green office guide 57 33
Number of solar powered branches 574 3
Number of solar powered ATM Booths 92 N/A
Online branches (as % of total branches) 89.65% N/A
Amount disbursed as green finance (in million Taka) 21,090.38 2,630.23
(Source: Bangladesh Bank)
Currently 57 banks and 33 NBFIs are using the green banking policy in Bangladesh. The Private
Commercial banks and the foreign commercial banks are leading in terms of green financing. Banks and
NBFIs are starting to take their businesses online, introduce solar power ATM booths and branches.
This inclination towards green banking is ever growing. However, Bangladesh is facing some challenges
ahead.
(Source: Bangladesh Bank)
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6. Challenges for Bangladesh in Green Banking:
a. Diversification of Green banking products.
b. Slow pace in making all branches of Govt. owned banks online.
c. Lac of energy consciousness in adopting effective office time management and Green building.
d. Paucity of adequate financing for mass transportation system.
References
Bb.org.bd. (2019). Regulations and Guidelines. [online] Available at:
https://www.bb.org.bd/aboutus/regulationguideline/guidelist.php [Accessed 16 May 2019].
En.wikipedia.org. (2019). Green bank. [online] Available at: https://en.wikipedia.org/wiki/Green_bank
[Accessed 15 May 2019].
Newbusinessage.com. (2019). Need For Green Banking | New Business Age - monthly business
magazine in English published from Nepal. [online]Availableat:
http://www.newbusinessage.com/Articles/view/2804 [Accessed 15 May 2019].
Researchgate.com. (2019). [online] Available at:
https://www.researchgate.net/publication/307934619_Green_Banking_in_Bangladesh_Present_Status_
Opportunities_and_Challenges [Accessed 16 May 2019].Want of motivation for more social
responsibility services (Researchgate.com, 2019).
www.greengrowthknowledge.org/resource/green-banking-going-green
https://www.thedailystar.net/news-detail-257872
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