Introduction:

In the present day, business is all about being green. Everybody from Walmart to Apple is
discussing how green their method, bundling, or strategies are. At the same time, green business
is truly in its early stages, and the ultimate chance of being green will most likely dis-till down to
some clearly understandable and perceptible objectives and practices. Bankers may question that
the importance of the “green movement” to their own bank. The term ‘Green’ refers a wide
scope of social, ethical and environmental dimensions. Instead of, the final goal of this study is
to implement the overall green banking which look into environmental aspect. “Green” is mainly
to describe banks’ which impacts on the environment, environmental responsibility and
environmental performances in their activities. Green banking is generally defined as promoting
environmentally friendly practices that aid customers in reducing their carbon footprint through
their banking operation activities. These practices include such things as online banking,
statements, bill payments, and account opening. Banks also invest in internal initiatives to reduce
their own carbon footprint”, (Schmidheiny and Zorraquin 1996).
Bai (2011) argued that Green Banking is similar to an ordinary bank. The aim of this ordinary
bank is to protect the environment and support natural resources which consider all the social
and environmental or ecological factors. It is also so-called an ethical bank or a sustainable bank.
As a bank green bank promotes environmental and social responsibility. But it operates as a
traditional community bank. It provides outstanding services to investors and clients. It has
adopted sustainability practices through all lines of the institute including- employees, facilities,
products & services, and governance. This banking system helps to make effective and far-
reaching market-based solutions to address a range of environmental problems. These problems
including environment change, deforestation, biodiversity loss and air quality issues. At the same
time green banking system recognize and protected new business chances which benefit to
customers. Green banking gives more loads to ecological issues. Its aim is to provide good
ecological and social business practices. Overall this banking is really a good way for people to
get more consciousness about global warming. Individually businessman will donate a lot to the
environment in addition to create this earth a better place to live.
Reasons of practicing of Green Banking:
The broad objective of the green banks are avoiding waste and giving priority to environment
and society. Focusing on environment-friendly initiatives by providing innovative financial and
ensure sustainable development.
 Using organizational resources with responsibility.
 keeping the world livable for a long period of time.
 to minimize paper works as much as possible inside and outside the bank.
 to achieve cost and time efficiency.

Analysis and Findings of Green Banking:

Bangladesh Bank selected ten commercial banks in Bangladesh on the basis of CAMEL„S rating
and Risk Based Capital Adequacy (RBCA) measurement that are executing green banking
practices. It is the first time of disclosing the green Banking report by central bank. Bangladesh
bank also emphasizes on the environmental issue for launching new branch as well as selecting
these banks such as Bank Asia ltd, Dutch-Bangla Bank limited (DBBL), Eastern Bank ltd (EBL),
Islami Bank Bangladesh ltd, Mutual trust bank ltd, Prime bank ltd, Pubali Bank ltd, Standard
Chartered bank, Shahajalal Islami bank ltd and Trust Bank ltd considering the green banking
information till first quarter of 2012. The Bangladesh bank authority considered the following
major activities under the green banking for getting the scenario of that;
 Green banking policy
 Green Banking unit
 Allotment of fund in green banking
 Funds for green financing
 Mobile banking
 on line banking
 Internet banking
 Green banking budget
 Environmental risk rating
 Effluent Treatment Plant (ETP)
 ETP related project
According to “Kaler Kantha- 21 June 2012”, The above mentioned banks allotted Tk. 525 crore
for green banking and Tk. 505 crore was provided for green financing among that fund. The 40
out of 47 nationalized and non nationalized commercial banks was established green banking
unit. The 41 commercial banks was formulated green banking policies.

GREEN BANKING OF SHAHAJALAL ISLAMI BANK LTD: As bankers, waste goes against
our grain, and frugality is a natural tendency. So it just makes sense that Green Bank would lead the way
in finding ways to blend our customers‟ financial interests with the interests of the environment. Green
Bank is equally committed to all of SJIBL stakeholders - customers, employees, communities and
shareholders. SJIBL's commitment towards Green Banking will be based on the following broad policies:
Provide a safe healthful workplace and ensure that personnel are properly trained and have appropriate
safety and emergency equipment. Participate in efforts to improve environmental protection and
understanding and share appropriate pollution prevention technology, knowledge and method. Use and
encage to use methods that do not adversely affect the environment, including developing and improving
products, operations and technologies to minimize waste, prevent air. Water, and other pollution,
minimize health and safety risks, and dispose of waste safely and responsibly. Ensure that SJIBL make
responsible use of energy including conserving energy, improving energy efficiency, and giving
preference to renewable over nonrenewable energy SJIBL when feasible.

GREEN BANKING OF NATIONAL BANK LTD: Green Banking policy enables an

environmentally responsible bank to contribute in the economic system consisting of production,
distribution business by conscious environmentally responsive finance, process, capacity building to
promote pollution free environment and living standards. National Bank Limited recognizes the
importance and launching different initiatives in this direction through strategic planning, operations and
risk management. This Green Banking Policy lays down the fundamental components of its rollover.
Green Banking requires a paradigmatic change in thinking about economics, business and finance. Its
success would be greater if the world governors started to revise their economic paradigms from being
“monetary economics” to “Ecological economics” and begin to transform their accounting principles
from purely being financial into ecological / operational energy accounting patterns. Future green banking
may transform in this direction.
GREEN BANKING OF BANK ASIA LTD: As a Bank they play an intermediary role between
economic development and conservation of the environment. Their Green Banking activities are on
multidimensional areas which include both in-house environment management and undertaking Green
Financing towards supporting Green Economy.

GREEN BANKING OF JANATA BANK LTD: The environment of the world is facing serious
threat because of environmental pollution and climatic change. Rapid climatic changes are causing
negative impacts on agriculture, forests, water resources, human health, bio-diversity, etc. Unusual rising
of greenhouse gas, unlawful destruction of forests, unplanned use and misuse of natural resources are the
main causes of environmental pollution and climatic change. Environmental hazards have been occurred
through air and water pollution, scarcity of water, narrowing river channels, faulty disposal of hospital,
industrial and household waste, destruction of forest, earth filling of ponds and water bodies. The
environment of Bangladesh is also deteriorating rapidly. Collective measures by all quarters are necessary
to protect the environment pollution and environmental hazard. As the most vulnerable among the
countries under the threat of climatic change risk, the financial institutes of Bangladesh also should play
important role to prevent the environmental hazard worldwide.

GREEN BANKING OF RUPALI BANK LTD: Green banking is a device that considers social
and ecological factors to protect environment and conserve natural resources. If we protect environment,
we protect ourselves. Green bankers think to protect environment and conserve power and energy in order
to ensure a safer world for the next generation.

Challenges of Green Banking

For profit entities green banks face a lot of challenges. These challenges are following below:
I. Matter of Diversification: Green banks limit their business exchanges to those business
substances who qualify screening procedure done by green banks. With set number of clients
they will have a littler base to support them. In the event that they center their credits on specific
commercial ventures, they open themselves up to being a great deal more powerless against
monetary movements.
II. Startup: Numerous banks in green business are new and are in start-up face. Generally it
takes 3 to 4 years for a bank to begin making money but it does not help banks during inflation.
III. Higher Operating Cost: Green banks require specialized talented, skills and experienced
staff to provide proper services to customers. Employees like experienced loan officers are
needed with additional background and experience in dealing with green businesses and
customers. At their profit margins employees provides breaks to customers through discounted
loan rate.
IV. Reputational Risk: If banks are involved in big projects which are damaging the
environment they are likely to loss of their reputations. In the financing of ecologically and
ethically questionable projects reputation risks are involved. There are also few cases where
environmental management system has resulted in cost saving, increase in bond value.
V. Credit Risk: Credit risks arise because of proposing to those clients whose organizations are
influenced by the expense of pollution, changes in environmental principles and new
requirements on productions levels. It is higher because of probability of customer default as an
effect of uncalculated costs for capital interest underway facilities, loss of market share and third
party claims.

Recommendations & Suggestions:

 Government should carefully monitor and supervise the green banking practices in
Bangladesh.
 Bangladesh bank must monitor the adherence of green banking guidelines by the commercial
and non-commercial banks.
 Government encourages the general people about green banking awareness through the
electronic and print media.
 Coordination among concerned authorities.
 speeding up awareness and effective capacity building.
 immediate concentration on sectoral lending policies and procedures.
 shifting of different categories of industry (such as, garments, textiles, and tannery) to a proper
location.
 Awareness of top management.
 Encouraging borrowers to go green.
 Need to apply green banking and use environmental risk management (ERM) guideline in
efficient manner.
 Develop a culture within the organization based on environmental governance.
 Replicate global as well as local best practices.
 Share Knowledge and technical know-how with peer groups.
 further integration with credit risk management in the overall credit risk methodology.
 Apply quantitative approach for environmental risk rating.
 Develop a database for technical assistance/issues.

Implementation of Green Banking in Bangladesh:

Green Banking in Bangladesh is still in a nascent stage. The banking sector of the country has
been facing a number of challenges in doing GB. Some of the challenges are inherent in the
nature of the country, some are related to the banking sector, and others are bank specific. The
country specific problems on the way to attaining sustainability objectives are poor enforcement
of environmental laws, inability to adopt modern technology from the traditional ones, shifting
red industries to appropriate locations, unaware of the end-users, etc. The DoE is not shouldering
its responsibilities effectively. As a developing country, we cannot afford to adopt modern
technology and abandon currently used ones. The red industries such as tanneries,
pharmaceuticals, chemicals, etc. have not shifted to appropriate locations due to lack of political
commitment of the government, and bureaucratic red tape. The consumer groups in Bangladesh
are very vulnerable, and mostly unaware of green practices. The sector specific problems include
reluctance of bank board and top management, lack of awareness and inability of bankers to
formulate policy documents, strategic plan, sector specific environmental guidelines, lack of
technical hand, etc. Most of the directors and senior people of the bank do not have right attitude
and understanding of green banking. They generally want to perform their responsibilities simply
by taking environmental clearance certificate which is not an effective measure in most of the
cases. The time frame as per the policy guideline for GB of BB is applicable to all banks
irrespective of their size. This has a problem of 'one size fits all' approach. The large banks
especially the State-Owned Commercial Banks (SCBs) dominated by rural branches cover about
half of the bank branches of the country. Moreover, most of the branches of SCBs do not have
online banking facilities. As a result, they are facing more difficulty in following the policy
guideline, especially in preparing the inventory of utilities, doing paperless banking etc.
Moreover, the absence of coordination among the commercial banks, Bangladesh Bank, DoE,
law enforcing agencies, environmental NGOs, and the end-users is another critical problem in
pursuing sustainable banking in Bangladesh.

Examining Achievements in Green Banking in Bangladesh: Green banking in

Bangladesh is still at a nascent stage. It got a momentum after the issuance of the Policy
Guidelines for Green Banking' in February 2011. The implementation status of GB by BB and
other banks is analyzed below.
1. In-house Green Practices by Bangladesh Bank:
Bangladesh Bank, the central bank of the country, has implemented a number of in-house green
initiatives besides ensuring sustainable practices by commercial banks. The major in-house practices
of BB include installation of 8 kilowatt solar panel on its roof top in 2010; use of energy saving LED
bulbs; in-house online connectivity; online salary and other necessary advice, personnel file updated
information, office orders, electronic-pass for visitors; e-recruitment; etendering; Enterprise Data
Warehouse; EXP Online Monitoring System; Online CIB; Bangladesh Automated Clearing House;
Enterprise Resources Planning; Bangladesh Electronic Fund Transfer Network; and National
Payment Switch.
2. Green Banking Practices by Commercial Banks:
In Bangladesh, Commercial banks of the country are trying to comply with the regulations of the
Government and Bangladesh Bank. The status of commercial banks in this regard is discussed below.
a) Green Governance
b) Paperless Banking
c) Branches/SME Centers/ATMs Powered by Solar Energy
d) Internal Environment Management
e) Environmental Risk Mitigation
f) Green Financing
g) Disbursement of Refinancing
h) Training, Development and Awareness
i) Waste Management
j) Disclosure and Reporting of Green Banking Activities
CONCLUSION:
Green is good for you and the planet. And banks big and small are increasingly offering green loans,
sustainable certificates of deposit and paperless checking rewards that dish out discounts and fee breaks.
Green banking isn't just for tree huggers anymore. It's becoming mainstream as a way to make, save and
lend money. "Customers want to make a difference in the environment," The easiest way for you to bank
green is to start using the online banking services that are available. Benefits of online banking include
less paperwork, less mail and less driving to branch offices, which all have a positive impact on the
environment. Banks can do much more to help the environment than just promote online banking. Banks
can also support eco-friendly groups and raise money for local environment initiatives. Government as
well as every bank should take initiatives in respect of green banking practices for protecting our
environment. Bangladesh bank will emphasize with significance of green banking activities/practices of a
bank while according permission for opening new bank branches and approval for launching new bank.
Government should also encourage the general people about the green banking practices. The central
bank should monitor or supervise commercial banks whether they are practicing green banking or not. So,
every bank has to participate and contribute to green banking practices in today’s extreme national and
global banking competition. Taking into account the adverse effects of climate change and progressive
action worldwide, Bangladesh Bank, the central bank of Bangladesh, has shown a deep commitment
towards the vision of green world through green initiatives. As far as green banking is concerned
Bangladeshi banks are far behind their counterparts from developed countries. However banks have a lot
more scope to contribute and should make adequate investment in generating renewable energy. Banks
should take initiative to set absolute Green House Gas emission reduction targets from operations, energy
use and business travel. Banks should also be engaged in financing Clean Development Mechanism
(CDM) projects. For this, awareness of development and advisory services by banks in the process of
development of CDM projects will be crucial. Banks should also take steps to form Climate Risk Fund to
finance the economic activities in the flood, cyclone and drought prone areas. In case of environmental
risk rating, banks need to apply a quantitative approach for a more justified rating along with
Environmental Due Diligence (EDD) Checklist under Subjective Criterion. They must speed up proper
awareness and effective capacity building for the Board of Directors/competent authority/management at
all levels of the banks/financial institutions and clients as well. They should take diversified activities
especially introducing innovative products in the model of Bangladeshi infrastructure for a true green
economy. Although Bangladesh have started its green journey lately, the hope is that a cooperative effort
of banks and other stakeholders will contribute remarkably in coping with climate challenges and
smoothen the path of sustainability in coming years.
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