ii

INTERNSHIP AFFILIATION REPORT

ON
GREEN BANKING: THE EMERGING DEMAND
OF ISLAMI BANK BANGLADESH LIMITED.



iii
LETTER OF TRANSMI TTAL
24
th
April, 2012

Mahmudul Huq
Senior Lecturer
Faculty of Business
ASA University Bangladesh

Subject: Submission of Internship Report.

Dear Sir,
It is an enormous pleasure to submit my report titled Green Banking: The Emerging Demand of
Islami Bank Bangladesh limited. which was assigned by you as a partial requirement of the
Internship Program- a prerequisite for the completion of the BBA program.

I would like to convey my gratitude to you and thank you for giving me the opportunity to work
on this topic under your thoughtful coordination. Utmost care and concentration has been given
in preparation of this paper. I have tried my best to present information that is valid and reliable
so that the findings are as accurate as possible. Due to various constrains, there may be some
mistakes for which I beg your kind apology.
Finally I shall be glad to answer your any kind of query related to this report, if necessary.

Sincerely yours,
Md. Shariful Islam
ID: 082-12-0001
BBA 4
th
batch
Major in Finance
ASA University Bangladesh



iv
LETTER OF ENDORSEMENT


The Internship Affiliation Report entitled Green Banking: The Emerging Demand of Islami
Bank Bangladesh limited. has been submitted to the Office of Placement & Alumni, in partial
fulfillment of the requirements for the degree of Bachelor of Business Administration, Major in
Finance, Faculty of Business Administration on spring, 2012 by Mr. Md. Shariful Islam, Id:
082-12-0001 The report has been accepted and may be presented to the Internship Defense
Committee for evaluation.
(Any opinions, suggestions made in this report are entirely that of the author of the report. The
University does not condone nor reject any of these opinions or suggestions).




Mahmudul Huq,
Senior Lecturer
Faculty of Business
ASA University Bangladesh
Internship Supervisor







v
CERTI FY BY I BBL.




vi
ACKNOWLEDGEMENT
First of all I remember Almighty Allah for making us successful to prepare this report. I am
grateful to the Islami Bank Bangladesh Limited authority that has helped us by updating desired
information at their website. At the very outset, I would like to thank, Md. Mahmudul Huq,
Senior lecturer, Faculty of Business, ASAUB. Dr. Mahmood Ahmed, EVP & Director
(Training), IBTRA,Course-Coordinator, Faculty member IBTRA for giving me support and
direction it would never be possible for us to make this report.

I also express my heart full thanks to all the faculty members of Islami Bank Training and Research
Academy (IBTRA) specially Dr. Mahmood Ahmed, SVP & Course Director (Training) IBTRA, Janab
Md. Hedayet Ullah, AD (Training) and other faculty members as well as the employees from top to
bottom of IBTRA, who gave us necessary information and excellent guidance to prepare this internship
report.

I express my heart full thanks all the concerned officers of the Islami Bank Bangladesh Limited, Amin
Bazar Branch, who kindly provided us the information and other hand-outs. Especially I cannot but
mention Jb. Mohammed Sirajul Alam, Vice President of IBBL and Branch Manager, Jb. Md. Ziabul
Alam, SPO & Jb. Md. Saidul Islam, SPO of this branch.
I express my heart full thanks to my internship colleague Md. Hanier Hossen and the management of this
Branch had been extremely helpful in providing necessary documents, annual report, statements, voucher
etc. which helped me to prepare this Internship report. I express a deep debt of appreciation &
gratefulness to the all employees of IBBL, Amin Bazar Branch.




vii
EXECUTIVE SUMMARY
Green banking, also known as a social, an ethical bank, alternative, civic, or sustainable bank, is
a bank concerned with the social and environmental impacts of its investments and loans.
Ethical banks are part of a larger societal movement toward more social and environmental
responsibility in the financial sector. This movement includes: ethical investment, socially
responsible investment, corporate social responsibility, and is also related to such movements as
the fair trade movement ethical consumerism, boycotting, etc. Ethical banking is a juvenile
sector within this movement. Other areas, such as fair trade, have comprehensive codes and
regulations to which all industries that wish to be certified as fair trade must adhere. Ethical
banking has not developed to this point; because of this it is difficult to create a concrete
definition distinguishing exactly what it is that sets an ethical bank apart from conventional
banks. Ethical banks are regulated by the same authorities as traditional banks and have to abide
by the same rules. In this report at first I tried to summarize an overview of IBBL. Then I tried to
define definition of green Banking, history and background of green banking. In the middle of
our report, I motivated by our study to describe about the importance, major areas, products of
green banking. Then I give various initiatives taken by internationally, nationally to implement
green banking. Then we tried to describe the green banking policy of IBBL. I also give some
findings of report. In conclusion I describe the advantages of IBBL to use Green Banking as an
instrument to reach the 16 core people of Bangladesh. Because one of the major economic agents
influencing overall industrial activity and economic growth is the financial institutions such as
banking sector. Since banking sector is one of the major stake holders in the Industrial sector, it
can find itself faced with credit risk and liability risks. Further, environmental impact might
affect the quality of assets and also rate of return of banks in the long-run. Thus the banks should
go green and play a pro-active role to take environmental and ecological aspects as part of their
lending principle, which would force industries to go for mandated investment for environmental
management, use of appropriate technologies and management systems. This paper explores the
importance of Green Banking, sites international experiences and highlights important lessons
for sustainable banking and development in Bangladesh. Finally this paper tries to draw picture
how Sustainable development can best be achieved by allowing markets to work within an
appropriate framework of cost efficient regulations and economic instruments.


viii
LIST OF CONTENTS



Titles Page No.
Cover Page i
Title ii
Letter of Transmittal iii
Letter of Endorsement iv
Certify by IBBL v
Acknowledgment vi
Executive Summary vii
Table of Contents

viii-xii

TABLE OF CONTENTS

2 INTRODUCTION ......................................................................................................................... 13
2.1 Rational of The Study: ................................................................................................................ 14
2.2 Background of The Organization: ............................................................................................... 15
2.2.1 Historical Background of Ibbl ............................................................................................. 16
2.2.2 Business Philosophy of Ibbl ................................................................................................ 17
2.2.3 Mission of IBBL: ................................................................................................................ 17
2.2.4 Vision of IBBL: .................................................................................................................. 17
2.2.5 Objectives of IBBL: ............................................................................................................ 18
2.2.6 IBBL at A Glance: ............................................................................................................. 19
2.3 Objectives of The Study:............................................................................................................. 20
2.3.1 General Objective: .............................................................................................................. 20
2.3.2 Specific Objective: .............................................................................................................. 20
2.4 Hypothesis: ................................................................................................................................. 21
2.5 Scope of The Study: .................................................................................................................... 22
2.6 Limitations of The Study: ........................................................................................................... 22
3 METHODOLOGY ....................................................................................................................... 24


ix
3.1 Literature Review: ...................................................................................................................... 25
3.2 Nature of The Research: ............................................................................................................. 27
3.3 Methods of Data Collection: ....................................................................................................... 28
3.3.1 Conceptualization: .............................................................................................................. 28
3.3.2 Theoretical Framework ....................................................................................................... 28
3.3.3 Sources of Data ................................................................................................................... 28
3.3.4 Primary Sources: ................................................................................................................. 29
3.3.5 Secondary Sources .............................................................................................................. 29
3.3.6 Data Processing And Analysis: ........................................................................................... 29
3.3.7 Preparation of The Report: .................................................................................................. 30
3.3.8 Flow Chart of The Study Methodology: ............................................................................. 31
4 UNDERTAKEN ACTIVITIES .................................................................................................... 32
4.1 Work-Related Activities ............................................................................................................. 33
4.1.1 General Banking Activities: ................................................................................................ 33
................................................................................................ 51 4.1.2 Investment System of IBBL
4.2 Other Activities: .......................................................................................................................... 58
...................................................................... 58 4.2.1 Other General Banking Operations of IBBL
........................................................................ 62 4.2.2 Special Schemes Under Investment Modes
4.3 Organization-Wide Activities: .................................................................................................... 65
..................................................................................................................... 65 4.3.1 ATM Services
.................................................................................................................................... 65 4.3.2 Swift
.......................................................................................... 65 4.3.3 Corporate Social Responsibility
.................................................................. 66 4.3.4 Welfare Activities By Islami Bank Foundation
.................................................................. 66 4.3.5 Welfare Oriented Special Investment Schemes
5 PREAMBLE OF GREEN BANKING ........................................................................................ 67
5.1 What is Green Banking ............................................................................................................... 69
5.2 Why Green Banking ................................................................................................................... 69
5.3 Definitions of Green Banking ..................................................................................................... 70
5.3.1 In General Focus: ................................................................................................................ 70
5.3.2 The Broad Focus: ................................................................................................................ 70
5.3.3 The Definitions Derived From Specialists: ......................................................................... 70
5.4 Conceptual Derivation of Green Banking: .................................................................................. 72
5.4.1 Flow Chart of Conceptual Derivation Of Green Banking: ................................................. 78


x
4.3 Green Banking: A New Eco-Friendly Concept in Banking Arena: .................................................. 78
5.4.2 Green Banking & Sustainable Growth ................................................................................ 81
5.4.3 Green Banking & ERM Interrelationship ........................................................................... 81
5.4.4 Ideal Benefits of Green Banking ......................................................................................... 81
6 THE INITIATIVES FOR PROMOTING GREEN BANKING ............................................... 83
6.1 Ethical Initiatives And Community Involvement: ...................................................................... 84
6.2 International Initiatives for Green Banking ................................................................................ 86
6.2.1 Global Initiatives: Durban Climate Conference 2011 ......................................................... 88
6.3 Domestic Initiatives for Green Banking ..................................................................................... 88
6.3.1 Bangladesh Banks Earlier Initiatives: ................................................................................ 89
6.3.2 Commercial Banks Attention to Green Banking: .............................................................. 90
7 THE MAJOR AREAS AND PRODUCTS OF GREEN BANKING: ...................................... 91
7.1 The Major Areas of Green Banking: ........................................................................................... 92
7.2 Green Banking Strategies: .......................................................................................................... 95
7.3 Green Banking to Mitigate Risks ................................................................................................ 97
7.4 Green Banking Products: ............................................................................................................ 99
7.4.1 Retail Banking .................................................................................................................. 100
7.4.2 Corporate & Investment Banking ..................................................................................... 101
7.4.3 Asset Management ............................................................................................................ 102
7.4.4 Insurance ........................................................................................................................... 103
7.5 Probable Key Opportunities of The Products: .......................................................................... 104
7.5.1 Emerging Market Opportunities for Green Financial Products: ....................................... 104
7.5.2 First Mover Opportunity for Green Financial Products ................................................ 105
8 GREEN BANKING AND BANGLADESH BANKING INDUSTRY .................................... 107
8.1 Banks Can Play Major Role in: ................................................................................................. 109
8.2 Green Banking Policy of Bangladesh Bank: ............................................................................. 110
8.3 Bangladesh Banks Green Banking Initiatives: ........................................................................ 112
8.3.1 Bbs In-House Initiatives: ................................................................................................. 113
8.4 BB Formulated Green Banking Policy Guideline Implemented in 3 Phases: ........................... 114
8.5 How Banks Will Be Benifited: ................................................................................................. 116
8.6 Bangladesh Banks Refinance Line for Renewable Energy: .................................................... 116
8.6.1 Bbs Refinance Line for Renewable Energy: Disbursement Profile ................................. 117
8.6.2 Financing of Solar Home System ..................................................................................... 117


xi
8.6.3 Financing of Bio-Gas Plants ............................................................................................. 118
8.6.4 Financing in Other Projects ............................................................................................... 118
8.7 Green Banking Activities of Banks: ......................................................................................... 119
8.7.1 Trust Bank: ........................................................................................................................ 119
8.7.2 MTBL ............................................................................................................................... 119
8.7.3 IBBL ................................................................................................................................. 120
8.7.4 Bank Al-Falah ................................................................................................................... 120
8.8 2050: Vision For Banking in Bangladesh: ................................................................................ 121
9 GREEN BANKING ACTIVITIES OF IBBL: ......................................................................... 122
9.1 Overview of Green Banking Policy of Islami Bank Bangladesh Limited ................................ 123
9.1.1 Green Banking Governance of Ibbl: ................................................................................. 123
9.1.2 Spectrum of Green Banking Activities of IBBL: .............................................................. 124
9.1.3 Working Paradigm of The ICT Division of IBBL ............................................................ 130
9.1.4 Care Banking System of Rbbl-Eibs (Electronic Integrated Banking System) .................. 130
9.1.5 Online Banking: ................................................................................................................ 130
9.1.6 The Atm Project And Interface of Ibbl Atm Network With Other ATM Networks ......... 131
9.1.7 On-Line Data Centre (Dc) & Disaster Recovery Site ....................................................... 131
9.1.8 Internet Banking (Ibanking) And Sms Banking ................................................................ 131
9.1.9 Bach (Bangladesh Automated Clearing House) ............................................................... 132
9.1.10 Beftn (Bangladesh Electronic Fund Transfer Network) ................................................... 132
9.2 Photos & Flashes of IBBL Green Banking: .............................................................................. 133
10 IMPLEMENTATION OF GREEN BANKING POLICY BY ISLAMI BANK AMIN
BAZAR .................................................................................................................................................... 139
10.1 Amin Bazar Branch at A Glance ............................................................................................... 140
10.2 Qualitative Interview and Answer: ........................................................................................... 142
10.3 Necessity Of Green Banking at Amin Bazar Branch ................................................................ 147
10.4 Green Banking Performance of Amin Bazar Branch ................................................................ 149
11 FINDINGS & RECOMMENDATIONS: .................................................................................. 150
11.1 Findings..................................................................................................................................... 151
11.2 Recommendations: .................................................................................................................... 152
11.2.1 The Way to Go Ahead ..................................................................................................... 152
11.2.2 What Can You Do as A Client? ........................................................................................ 152
11.2.3 What Can Do A Bank? ...................................................................................................... 153


xii
11.2.4 What Can Do Islami Bank Bangladesh Limited Specially Amin Bazar Branch: ............. 154
12 CONCLUSION ........................................................................................................................... 156
13 REFERENCES ............................................................................................................................ 160
14 APPENDIX: ................................................................................................................................. 162
14.1 Sector Wisedetails Investment Position 2012 To 2011 ............................................................. 162
14.2 Position of Amin Bazar Branch At 31.12.2012 ........................................................................ 165
14.3 Resume of Md. Shariful Islam .................................................................................................. 166




13











1 : INTRODUCTION




14
1.1 RATIONAL OF THE STUDY:
The success of a program like BBA is determined by how successfully the student of this
program implemented in the practical life, which they learned from the program. Universities
take many steps to make bridge between the academic knowledge and actual business world
event of BBA students, Internship program is one of them. Internship is an integral part of BBA
(Bachelor of Business Administration) program in ASA University Bangladesh and it contains 3
credits. This program is actually a juncture of academic and professional life dealings. It is for to
get some experience of practical work environment and also be familiar with that. My internship
program started at 22th January, 2012 at Islami Bank Bangladesh Limited. In the modern society
commercial Banks occupy a position of economic importance. And in Bangladesh banking
industry Islamic Banks play a significant role to meet the needs of the society such as capital
formation, large-scale production, industrialization, growth of trade and economy etc. Islamic
banks are unconditional and specialized financial institutions that perform most of the standard
banking services and investment activities on the basis of profit and loss sharing system
conforming to the principles of Islamic Shariah. Out of 48 banking institutions, 7 banks are
backed by Islamic mechanism and worldwide accepted Islamic morality and established code of
conduct. Islami Bank Bangladesh Limited is pioneer and the market leader in doing Islamic
Banking in Bangladesh.
Deforestation, dissertation, flood, soil erosion, siltation, sedimentation, river bank erosion,
increased evaporation, Co2 emissions, rising sea-level, displacement, cyclones, salinization,
arsenic contamination are most burning word in the present world. And all words are related
natural disaster and climate change. Because, climate change is the most complicated issue the
world is facing. Across the globe there have been continuous endeavors to measure and mitigate
the risk of climate change caused by human activity. Another name of this attempt is
Sustainable Development to us. The process of sustainable development involves all sectors in
the economy Government, NGOs, corporates, citizens and, of course, the financial sector. Our
beloved mother land Bangladesh is one most affected country by this climate change. And
Bangladesh banking industry is ahead one step from other financial institutions for taking
endeavors to measure and mitigate the risk of climate change caused by human and banking
activity. This activity is familiar in banking industry with title of Green Banking. To do Green


15
Banking in Bangladesh Islami Bank Bangladesh Limited pioneer among our domestic banks.
The world is now become globalize so we have to sustain in the competitive world. We must
take the competitive advantage thats why we cannot avoid the environment while doing
business. Thats why I feel very much interest in Green Banking. And it has another importance
to me that is implementation of my educational knowledge and theoretical knowledge to the
practical.
1.2 BACKGROUND OF THE ORGANIZATION:
Presently Banks in Bangladesh is passing a crucial situation, surfing through an unprecedented
climate both at home and abroad. Amid challenges, the banking industry witnessed a major
change, deregulation in some major areas including the interest and exchange rate. But, there is
no chance to ignore the importance of banking industry in Bangladesh Economics, although the
present situation is created a doubt about this. Presently in our country, Muslim constituted
89.7% of the total population. The people of this country are deeply committed to Islamic way of
life as enshrined in the holy Quran and the Sunnah. Naturally, it remains a deep cru in their
hearts to fashion and design their economic lives in accordance with the precepts of Islam. The
establishment of Islami Bank Bangladesh Limited on March 13, 1983, is the true reflection of
this inner urge of its people, which started functioning with erect from March 30, 1983. Since its
establishment banking functions of IBBL is an important aspect in our economy as it has broken
the line of interest based traditional banking system through the introduction Islamic Shariah
based banking. It is committed to conduct all banking and investment activities on the basis of
interest fee profit-loss sharing system. In doing so, it has unveiled a new horizon and ushered in
a new silver lining of hope towards materializing a long cherished dream of the people of
Bangladesh for doing their banking transactions in line with what is prescribed by Islam. With
the active co-operation and participation of Islamic Development Bank (IDB) and some other
Islamic banks, financial institutions, government bodies and eminent personalities of the Middle
East and the gulf countries, Islami Bank Bangladesh Limited has by now earned the unique
position of a leading private commercial bank in Bangladesh. Islami Bank Bangladesh Limited is
the largest shariah based Bank in South and Southeast Asia. It has already gained a good
reputation in muslim community and conquer the heart non-muslim people of Bangladesh.


16
Because Islamic Banking is especially important in the world countries, which are characterize by
unemployment, inequitable distribution of income and wealth, etc.
1.2.1 HISTORICAL BACKGROUND OF IBBL

In August 1974, Bangladesh signed the Charter of Islamic Development Bank and committed
itself to reorganize its economic and financial system as per Islamic Shariah. In January 1981,
Late President Ziaur Rahman while addressing the 3
rd
Islamic Summit Conference held at Macca
and Taif suggested. "The Islamic countries should develop a separate banking system of their
own in order to facilitate their trade and commerce". This statement of Late President Ziaur
Rahman indicated favorable attitude of the Government of the People's Republic of Bangladesh
towards establishing Islamic banks and financial institutions in the country. Earlier in November
1982, Bangladesh Bank, the country's Central Bank, sent a representative to study the working of
several Islamic Banks abroad. In November 1982, a delegation of IDB visited Bangladesh and
showed keen interest to participate in establishing a joint venture Islamic Bank in the private
sector. They found a lot of work had already been done and Islamic banking was in a ready form
for immediate introduction. Two professional bodies like, Islamic Economics Research Bureau
(IERB) and Bangladesh Islamic Banker's Association (BIBA) mode significant contributions
towards introduction of Islamic Bank in the country.They came forward to provide training on
Islami Banking to top bankers and economists to fill up the vacuum of leadership for the future
Islamic banks in Bangladesh. They also help seminars, symposia and workshops on Islamic
economics and banking throughout the country to mobilize public opinion in favor of Islamic
banking. Their professional activities were reinforced by a number of Muslim entrepreneurs
working under the aegis to the then Muslim Businessmen society (now reorganized as
industrialist & Businessmen Association). The body concentrated mainly in mobilizing equity
capital for the emerging Islamic Bank.
At last, the long drawn struggle to establish an Islamic bank in Bangladesh becomes a reality.
Islamic Bank Bangladesh Limited was established in March 1983. In which 19 Bangladeshi
nationals, 4 Bangladeshi institutions, and 11 banks, financial institutions and government bodies
of the Middle East and Europe Including IDB and two eminent personalities of the kingdom of
Saudi Arabia Joined hands to make the dream a reality.


17
1.2.2 BUSINESS PHILOSOPHY OF IBBL
The philosophy of IBBL is to the principles of Islamic Shariah. The organization of Islamic
conference (OIC) defines an Islamic Bank as "A financial institution whose status, rules and
procedures expressly state its commitment to the principles of Islamic Shariah and to the banking
of the receipt and payment of interest on any of its operations. The sponsor, perception is that
IBBL should be quite different from other privately owned and managed commercial bank
operating in Bangladesh, IBBL to grow as a leader in the industry rather than a follower. The
leadership will be in the area of service, constant effort being made to add new dimensions so
that clients can get "Additional" in the matter of services commensurate with the needs and
requirement of the country growing society and developing economy.
1.2.3 MISSION OF IBBL:
I. To conduct interest- free banking.
II. To established participatory banking instead of banking on debtor creditor
relationship.
III. Use modern technology to smoothen the service given to clients.
IV. To invest through different modes permitted under Islamic Shariah
V. To accept deposit on profit-loss sharing basis.
VI. To established a welfare-oriented banking system.
VII. Achieve balanced growth and equitable development through diversified investment
operations particularly in the priority sectors and less development areas of the country.
VIII. To play a vital role in human development and employment generation.
IX. To contribute in achieving the ultimate goal of Islamic economic system.
1.2.4 VISION OF IBBL:
Islamic bank vision to always strive to achieve superior financial performance is considered a
leading Islamic bank by reputation and performance. They are:
I. To establish and maintain the modern banking technology,


18
II. To ensure the soundness and development of the financial system based on Islamic
principles
III. To become the strong and efficient organization with highly motivated professionals,
working for the benefit of people, based upon accountability, transparency and integrity
in order to ensure the stability of finical systems.
IV. Try to encourage savings in the form of direct investment.
V. Try to encourage investment particularly in project, which are more likely to lead to
higher employment
1.2.5 OBJECTIVES OF IBBL:
The primary objective of establishing Islamic banks all over the world is to promote, foster and
develop the application of Islamic principles in the business sector. More specifically, the
objectives of Islamic banking when viewed in the context of its role in the economy are listed as
following:
I. To conduct interest free banking.
II. To offer contemporary financial services in conformity with Islamic Shariah:
III. To contribute towards economic development and prosperity within the Principles of
Islamic justice;
IV. Optimum allocation of scarce financial resources
V. To establishing participatory banking instead of banking on debtor creditor relationship.
VI. To establish welfare oriented banking system
VII. To pay a vital role in human development and employment generations.
VIII. Help to ensure equitable distribution of income.
IX. To established modern banking system.



19
1.2.6 IBBL AT A GLANCE:

Organization Overview (As on 31
th
December 2011)
Date of Incorporation 13th March 1983
Inauguration of 1st Branch (Local
office, Dhaka)
30th March 1983

Name of Chairman Prof. Abu Nasser Muhammad Abduz Zaher
Local Shareholders 42.15%
Foreign Shareholders 57.85%
Authorized Capital Tk.20, 000.00 million
Paid-up
Capital
Tk.10,007.71 million
Deposit Tk.341,361.00 million (provisional)
Investment(including investment in
shares / Securities)
Tk.
341,031.00 million (Provisional).
Import Tk.301, 207.00million(Provisional)
Export Tk.178, 244.00million(Provisional)
Remittance Tk.236, 607.00million(Provisional)
Total Number of Branches 236
Total number of SME Krishi
Branches
30
Total Branches 266
Number of AD Branches 43
Number of
Shareholders
63,001 (As on 30-June-2011)
Manpower 11,465
No. of Share ATM Booth 1035
No. of Own ATM Booth 100


20

Credit Ratings
Long-term AA+
Short-term ST-1

1.3 OBJECTIVES OF THE STUDY:
The objectives of the report are in lies with the objective of Internship. The prime goal of
Internship is to provide a hand on practical experience to the student and to generate an
opportunity to match the theoretical concepts with real life situation. As stated above to deal
with these objectives this report has been primarily divided into two parts. The objectives are:
1.3.1 GENERAL OBJECTIVE:
The general objective of this report is to fulfill the partial requirements of the BBA program and
making me competent to cope with corporate culture through observing the general banking and
investment operation of IBBL in order to remove the gap between practical world and theoretical
knowledge.
1.3.2 SPECIFIC OBJECTIVE:
The specific objectives of this report is to
I. To get comprehensive knowledge on overall banking industry of Bangladesh.
II. To gather comprehensive knowledge on overall banking functions of IBBL.
III. To get vast knowledge about Green Banking.
IV. To learn the major areas and products of Green Banking.
V. To learn initiatives for promoting green banking at home and abroad.
VI. To identify IBBL Green Banking policy and implementation.
VII. To identify the necessity of Green Banking for Amin Bazar Branch.


21
VIII. To measure and evaluate the performance of IBBL based on Green Banking.
IX. To identify the Green Banking policy that adapted by Amin Bazar branch
1.4 HYPOTHESIS:
I. Green banking is helpful improving the image of the Bank by showing and serving its
commitment to the Bangladeshi people.
II. Green Banking is helpful to reduce operational cost due to less consumption of office
stationeries, energy and water.
III. Green Banking is a mechanism to increase productivity as well as efficiency of the
employees through skilled & optimum usage of technology.
IV. Islami Bank Bangladesh Limited adopting properly Bangladesh Bank Green Banking
Policy.
V. Islami Bank Bangladesh Limited is developing customers consciousness on environment
by arranging awareness development program.
VI. Islami Bank Bangladesh Limited is achieved a step ahead position from other domestic
commercial bank from the perspective of implementing green banking policy.
VII. Amin Bazar branch of Islami Bank Bangladesh Limited has great scope to practice green
banking and this is the emerging demand of this branch.



22
1.5 SCOPE OF THE STUDY:
We know that Bangladesh is the most preferable playground to play with people life for natural
disaster. Deforestation, dissertation, flood, soil erosion, siltation, sedimentation, river bank
erosion, increased evaporation, Co
2
emissions, rising sea-level, displacement, cyclones,
salinization, arsenic contamination are most burning word in the present world. And all these
words are related natural disaster and very suitable to accommodate in our country. Thats why,
Green Banking open a new era for Bangladesh banking industry to create a positive image,
increase market value and contribute for developing the country. In our country Islami Bank is
the pioneer of welfare driven economy and promoter of balanced growth in a country like
Bangladesh which has a poverty stricken contemporary economic background. So IBBL has a
great opportunity to implement their mission, objectives very easily through green banking. By
adopting a comprehensive green banking policy, installing new green banking products,
considering green banking strategies at time of loan disbursement, developing program for the
clients, mass people, and stakeholders to create awareness among them about the environment a
bank can easily practice green banking. Bangladesh Bank the central bank of Bangladesh is
already placed an order on February 27, 2011for the banking industry. Islami Bank, Mutual Trust
Bank Ltd., AB Bank Ltd., Al Arafah Islami Bank Ltd., National Bank Ltd., Uttara Bank Ltd.,
Rupali Bank Ltd., Jamuna Bank Ltd., Brac Bank Ltd., United Commercial Bank Ltd., Basic
Bank Ltd., along with Islami Bank Bangladesh Ltd., are famous for practicing green banking in
Bangladesh.
1.6 LIMITATIONS OF THE STUDY:
It is obvious that every study has some limitations. The study I have made is of great importance
and require me huge work. While conducting I had to face a number of problems. which called
limitations of my report. Those limiting factors that hampered my smooth workings in bank and
finally in preparing this report are as follows:



23
Lack of time:
The time period of this study is very short. We had only 8 weeks in my hand to complete this
report, which was not enough. So I could not go in depth of the study. Most of the times, the
officials were busy and were not able to give me much time.
Insufficient data:
There is a great lacking of numerical data about green banking. Some desired information could
not be collected due to confidentiality of business.
Lack of monitory support:
Few officers sometime were busy in their job. Sometime they didnt want to supervise us out
of their official work.
Other limitations:
I have lacking of previous experience in this concern. And many practical matters have been
written from my own observation that may vary from person to person.





24












2 : METHODOLOGY



25
Methodology is the study or theoretical analysis of particular working methods. Adoption of
methodology is an important factor in performing any study. If the methodology of the study is
properly adopted and the study runs properly according to the methodology, the study is
supposed to be successful. The following represents the methodology of the study.
2.1 LITERATURE REVIEW:
A comprehensive literature study was done to gain an exact scenario of the present status of
green banking. During the literature survey relevant information was collected from a number of
books journals, magazines, reports, government and non-government documents and other
printed materials from the concerned financial and non-financial institutions. A very little study
was conducted with the intensity of the green banking till today, although green banking is a
burning issue and very crucial phenomena for the present world banking industry.
Green (1989) revealed that a bank's responsibility extends to Government, customers,
shareholders, staff, and the community. Companies do have ethical responsibility, but it is not
protected by limited liability from the consequences of their actions. A company's record and the
perception of its ethics affect its reputation and ensure long-term success or failure. Further, he
concluded that as we face increasingly complex and conflicting issues, our commitment to
ethical behavior would be tested
6
.
Hitt, Keats and DeMarie (1998) identified strategic challenges and discontinuities encountered
by firms in 21st century. They analyzed that to build and maintain competitive advantage,
requires a new types of organization, leaders for survival and global market leadership. It was
concluded that success in 21st century organization would depend on building strategic
flexibility like exercising strategic leadership, building dynamic core competencies, focusing and
developing human capital, effectively using new manufacturing technologies and implementing
new organization structures and culture. Therefore, the responsibility of banks in this scenario
should be reviewed so that changes of 21st century can be effectively controlled
4,5
.
There is a strong need for re-inventing the role of banks as Jeucken (2001) has compared three
world regions Europe (24 banks), North America (6 banks) and Oceania (Japan and Australia; 4
banks) for the period of 1998 to 2000. He analyzed and focused some important differences


26
between regions, countries, and banks with regard to sustainable banking. The methodology was
entirely based on studying environmental and annual reports of banks. He concluded that 53
percent of the banks adopt a defensive position towards the environment issue. Still, a large
group of banks do not see the role, which they can play a sustainable development. Sahu and
Rajasekhar (2005) addressed and analyzed certain questions regarding bank credit to the
agricultural sector and impact of the closure of rural bank branches on the provision of credit to
agriculture by analyzing the data on the total outstanding credit provided by the scheduled
commercial banks to the agricultural sector during the period 1981 to 2000 and concluded that
profit-oriented norms persuaded commercial banks to neglect the agricultural sector, provision of
a credit subsidy reduce the supply of agricultural credit
2,3
.
Lyne, Nielson, and Tierney (2009) evaluated and analyzed10, 000 Multilateral Development
Banks (MDBs) loans from 1980 to 2000. They found that (MDBs) dramatically increased social
lending for health, education, and safety nets after 1985. Yet the great powers social policy
preferences remained relatively static from 1980 to 2000. This contradicts the conventional view
that powerful states control International Organizations (IOs). They argued that highly
institutionalized IOs like MDBs require a complete model of possible member-state coalitions
encompassing the preferences of all member statesnot just major powers. McMichael (2009)
questions the Bank's new vision, arguing that new wine in old bottles will continue to supply
affluence rather than feed the world and sustain its agricultures, especially at a time when land
is being commandeered for luxury foods (e.g. the livestock complex, all-season vegetables and
fruits) and bio-fuels, neither of which feed the poor. Ironically, the reproduction of poverty
remains the Bank's main source of legitimacy.
Goyal and Joshi (2011) studied a sample of 19 bank mergers (post liberalization) based on
number of branches and geographical penetration in the market. Apart from financial aspects,
they observed some emerging issues like employees perception, branch size, customer
perception, communication, change management strategies, and human resource management.
These issues can be settled when a bank implements certain social and ethical policies
5
.
Weber and Remer (2011) described Social Banking as a way of value-driven banking that has a
positive social and ecological impact at its heart, as well as its own economic sustainability.
Most of the Social Banks came out of the crisis much stronger and bigger than they were before.


27
In addition, none of the Social Banks had to be bailed out with public funds. This increasingly
attracts the interest not only of clients searching for safe and sensible ways to deposit their funds
but also of conventional banks that begin to understand the potential of a more socially oriented
approach towards banking. It is a matter of awareness, which compel us to have some views
from a different outlook. Bearing in mind the various functions of a bank and current scenario,
now it is high time to understand the role of banks in 21st century. Therefore, this study is
conducted to understand the various roles and responsibilities of banks in order to strive more
effectively and efficiently against some current issues, which has already attracted the attention
of the world
5
.
Following are the objectives to uncover the issues:
To understand the various roles and functions of Banks.
To know various emerging issues of 21st century in Banking Industry
4
.
The synopsis of my report literature review is Green Banking; the focus is on satisfying existing
needs in the real economy and the society; also taking into account their social, cultural,
ecological, and economic sustainability. In the repercussion of the crisis, many people felt that
green banking is more caring for the overall progress of society than traditional and mainstream
banking. It is assumed that green banking may provide important lessons for the banking and
financial sector to avoid further crises in the future.
2.2 NATURE OF THE RESEARCH:
Research is the systematic investigation into existing or new knowledge. It is used to establish or
confirm facts, reaffirm the results of previous work, solve new or existing problems, support
theorems, or develop new theories. The goal of the research process is to produce new
knowledge or deepen understanding of a topic or issue. This process takes three main forms:
I. Exploratory Research: An exploratory study is undertaken when not much is known
about the situation at hand or no information is available on how similar problem or
research issues have been solved in the past.
II. Constructive Research: Constructive research tests theories and proposes solutions to a
problem or question.


28
III. Empirical research: Empirical research tests the feasibility of a solution using empirical
evidence.
The literature review of this report is saying us a very little study was conducted with the
intensity of the green banking till today, although green banking is a burning issue and very
crucial phenomena for the present world banking industry. So, definitely my this report research
type is exploratory research because, An exploratory study is undertaken when not much is
known about the situation at hand or no information is available on how similar problem or
research issues have been solved in the past.
2.3 METHODS OF DATA COLLECTION:
2.3.1 CONCEPTUALIZATION:
Conceptualization is the way of developing concepts about the thesis topic and its related topics
and its related matter the study follows a procedural approach in order to get complete picture of
concentration of different banks initiatives to green banking in worldwide and in Bangladesh
especially Islami Bank Bangladesh limited.
2.3.2 THEORETICAL FRAMEWORK
This report theoretical framework is focused on the insight of the current process theories and
techniques in related to practicing green banking to get sustainability. It emphasizes the green
banking policy, green banking strategies, green products and probable key opportunities of the
products. And their inter relationship with making the environment green.
2.3.3 SOURCES OF DATA
In order to make the report more meaningful and presentable, data is collected from many
sources. The data collection sources can be accumulated two sources. Majority of the
information was collected from secondary sources.



29
2.3.4 PRIMARY SOURCES:
The Primary Sources are as follows-
I. Face-to-face conversation with the respective officers and staffs of the Branch.
II. Informal conversation with the investment clients.
III. Practical work exposures form the different desks of the four departments of the Branch
covered.
IV. Relevant file study as provided by the officers concerned.
2.3.5 SECONDARY SOURCES
The Secondary Sources of data and information are:
I. Annual Report (Last five years) of Islami Bank Bangladesh Limited.
II. Periodicals published by Bangladesh Bank.
III. Various books, articles, compilations etc. regarding green banking functions, and the
policies.
2.3.6 DATA PROCESSING AND ANALYSIS:
Collected data and information both from primary and secondary sources were analyzed in the.
Raw data from the survey have collected and edited and then classified and edited and then
classified according to the objectives. I have used some techniques for the purpose of analysis.
These are:
Theoretical analysis
Graphical analysis
Tabular analysis



30
2.3.7 PREPARATION OF THE REPORT:
Following steps are associated with the preparation of this thesis:
I. Representations of the assembled data through graph
II. Preparation of the draft report
III. Preparation of the final report


31
2.3.8 FLOW CHART OF THE STUDY METHODOLOGY:




























Conceptualization
Developing Theoretical Framework
Fixing Goals and Objectives
Data Collection
Primary Data Secondary Data
Branch Investigation
Data Processing, Interpretation and Analysis
Identification of the
Potential Problem
Data Organization
Related Organization
Findings
Report Presentation
Recommendations


32












3 : UNDERTAKEN ACTIVITIES



33
3.1 WORK-RELATED ACTIVITIES
3.1.1 GENERAL BANKING ACTIVITIES:
General Banking is the heart of Banking. Here money collection procedure occurs. Other
services, like cheque encashment, account transfer; account closing, bills and remittance are
given here. So general banking is the most important thing in banking service. General banking
provides the foundation of banker customer relationship through opening account. This is the
busiest department and the daily transactions of concerned to the customers for drawing or
depository money , selling of the instrument to them for remittance purpose, collection of their
instruments providing other services to them and keep customer section busy. The major general
banking operations of IBBL are
Mobilizing deposits through opening different types of account.
Receipts and payments of cash.
Passing, cancellation, issuance and payment of cheque.
Maintenance of Vault and Strong Room under
Joint custody for safe keeping cash and vouchers.
Handling transfer transactions.
Operations of Clearing House. Proper housekeeping , maintenance of Books and Records
and Computer (eIBS Software)
Maintenance of ATM, Electronic Funds Transfer, Internet Banking, Phone Banking etc.
Maintenance of security in transaction hour by armed security guard.
Correspondence, receipt & dispatch.
Account closing and transfer
Personal administration
Usually the following sections/departments are involved to perform the general banking
operations:
Accounts Section
Bills & Remittance Section
Clearing and Collection Section
Cash Section


34
3.1.1.1 ACCOUNTS SECTION:
Account section deals with three major works are:
Mobilizing Deposits
Account Closing
Account Transfer
3.1.1.1.1 MOBILIZING DEPOSITS:
Islami Bank accepts deposits under two principles viz. Al-Wadeah principle and Mudaraba
principle. Current account is operated on Al-Wadeah principle and all other deposit accounts on
Mudaraba principle of Islamic Shariah are:
I. Al-Wadeah: The word 'Al-Wadeah' has been derived from the Arabic word 'Wada'yun'
which means to keep/to deposit/to give up/Amanat. In case of Amanat, Bank/any other
person/institution cannot use, invest, and amalgamate the funds of Amanat with the
banks/his/its other funds without prior permission of the owner of the Amanat. Thus, in
Al-Wadeah account there is a provision to obtain prior permission from the owner of the
fund to use, invest, amalgamate the said fund with their/other funds and return the same
within banking hour on demand. Bank is here Muaddah Elaihe and depositor is
Muaddi
II. Mudaraba: The word 'Mudaraba' has been derived from Arabic word 'Darb'/'Darbun'
which means Travel. Thus the word Mudaraba means travel for undertaking business.
Mudaraba is a form of partnership in profit whereby one party provides capital and the
other party provides skill and labour. The provider of capital is called Shahib-al-Mal or
the Rabb-ul-Mal (the financier or owner of the fund) and acts like a sleeping or dormant
partner while the provider of skill and labour is called Mudarib (entrepreneur/organizer)
who provides the entrepreneurship and management for carrying on any venture, trade,
industry or service with the objectives of earning profits. Both the parties share the profit
as per pre-agreed ratio and the losses, if any, being borne by the provider of capital i.e.
Shahib-al-Mal except if it is due to breach of trust, misconduct, negligence or violation
of the conditions agreed upon by the Mudarib becomes liable for that. The Mudarib is
in the nature of a trustee as well as an agent of the business. He is to work with honesty


35
and sincerity and to exercise the maximum possible care and precaution in the exercise of
his functions.


III. Deposit Products of IBBL:
a) Al-Wadeah Current Account
b) Mudaraba Savings Account
c) Mudaraba Special Notice Account
d) Mudaraba Term Deposit Account
e) Mudaraba Hajj Savings Scheme
f) Mudaraba Savings Bond Scheme
g) Mudaraba Special Savings (Pension) Account
h) Mudaraba Monthly Profit Deposit Scheme
i) Mudaraba Muhor Savings Account
j) Mudaraba Waqf Cash Deposit Account
k) Mudaraba Foreign Currency Deposit (Savings) Account
l) Mudaraba School Students Savings Account


a) Al-Wadeah Current Account: The major features of this account are as follows:
The depositor can deposit any amount in this account and the bank receives money from
the clients for safe-custody with the condition to return the money on demand.
The depositor can withdraw any amount at any time through cheque or any other
acceptable means retaining the minimum balance in the account.
As the depositors do not take the risk of losses with Al-Wadeah account they are not
entitled to any profit from use of their deposits by the investors.
Cheques, bills etc. may be collected in this account.
Govt. excise and incidental charges for safe keeping of the depositors money or for
services rendered to them can be realized from the account as per rule.



36

b) Mudaraba Savings Account: The major features of this account are as follows:
This account may be opened in single or joint name of the person (s) or any organization
acceptable to the Bank.
The accountholders are generally allowed to deposit several times as they require but in
case of withdrawal of money there are some restrictions as per rules and practices of the
commercial banks.
The Bank is authorized to invest the Mudaraba funds at the risk of the depositors.
The Bank will arrange proper deployment of funds without any intervention of the
depositors.
Total profit resulting from such investment will be distributed between the Bank and the
depositors as per agreed ratio.
If any loss is incurred, it is to be borne by the depositors. However, in IBBL a reserve
fund named as Investment Loss Offsetting Reserve (ILOR) has been created to meet up
such losses and other purposes.
c) Mudaraba Special Notice Account: This account is also conducted under Mudaraba
principle. The very special character of this account is to serve seven days prior notice for
any withdrawal.
d) Mudaraba Term Deposit Account: The major features of this account are as follows:
Mudaraba Term Deposit Account is also conducted under Mudaraba principle of Islamic
Shariah.
Generally deposit is accepted in different tenure of 3,6,12,24 & 36 months of minimum
Tk.1000.
No withdrawal facility is allowed here.
However the depositors may enjoy premature encashment facility or may avail Quard
against the lien of MTDR as per norms of the Bank. If the clients encash the MTDR
before 3 months, no profit is allowed.
MTDR holders can withdraw profit yearly basis against 1(one) year and above MTDR. In
case of no withdrawal of profit, the same to be considered principal amount for further
period.


37
If MTDR is not encash within 1(one) month of its maturity date, it is automatically
renewed for a further same period.

e) Mudaraba Hajj Savings Scheme: The major features of this account are as follows:
Any Muslim intending to perform Hajj can open this account for accumulating savings
with a view to meeting Hajj expenses and may select 25 alternative choices based on
duration from 1 year to 25 years.
The Bank accepts deposits on installment basis under Mudaraba principle.
Considering the religious aspects and to inspire the individual to perform Hajj, the Bank
gives here the highest weightage in distribution of profit in compare to other accounts.
Premature encashment is allowed. To avail the highest weightage which is 1.35 for above
10 years term and 1.30 up to 10 years term, the accountholder has to show the proof of
performing Hajj.
It is opened in the name of single person.
f) Mudaraba Savings Bond Scheme: The major features of this account are as follows:
The person (s) aged 18 years and above shall be eligible to purchase Bond (s) in single
name or in joint name.
Educational Institutions, Clubs, Associations and other non-trading and non-profit socio-
economic institutions shall also be eligible to purchase Bond(s) in the name of the
institutions.
Guardian(s) shall be allowed to purchase Bond(s) jointly with a Minor mentioning the
age of the Minor.
The profit of Bond may be withdrawn by the bondholder once in a year. No profit shall
be paid for the period after maturing of the Bond, if not encashed on maturity.
The terms of Bond are 5-year & 8-year.
Available denominations are Tk.5,000; Tk.10,000; Tk.25,000; Tk.50,000; Tk.1,00,000;
Tk.5,00,000; & Tk.10,00,000.
Present weightages are 1.10 & 1.25 respectively.





38
g) Mudaraba Special Savings (Pension) Scheme: The major features of this account are as
follows:
IBBL has introduced such Scheme (viz. MSS) so that a person can get the opportunity to
build-up savings by contributing small monthly installments for getting an attractive
amount at the end of a specific term of maturity.
Generally the terms of maturity are 5-year & 10- year. Under this scheme, account may
be opened for monthly deposits of Tk.100; Tk.200; Tk.500; Tk.1,000 and multiple of
Tk.1,000 upto Tk.20,000 only.
Any bonafide citizen of Bangladesh of 18 years and above can open this account in his
own name or in the name of Minor.
The applicant shall have to introduce by a bonafide account holder of the Branch where
he intends to open account or any client of any Branch of IBBL or any respectable person
known to the Bank.
The MSS account can be transferred from one Branch to another Branch.
The depositors may issue written standing instruction for monthly transfer of installment
from any other account maintained with the same Branch for credit to his MSS account.
The client has to pay a charge of Tk.5/= only for each such transfer.
Benefits of full weightage with yearly cumulating of profit shall become payable if
withdrawn on maturity. No profit shall accrue if the account is closed within 1(one) year.
In case of premature encash/withdrawn after 1(one) year, profit shall be payable at the
rate applicable for Mudaraba Savings Deposits. In case of 10 years term MSS account
encashed after 5 years but before 10 years, profit shall be payable at the rate applicable to
5 years term MSS account for 5 years and at the rate of Mudaraba Savings Deposit for
the subsequent period.




39
h) Mudaraba Monthly Profit Deposit Scheme: The major features of this account are as
follows:
Any individual may open an account under this Scheme by depositing a minimum
amount of Tk.1, 00,000 and multiples thereof at a time for 3 or 5 years.
Monthly provisional profit is given to the account just after completion of 30 days from
the date of opening of the account.
The profit amount shall be adjusted after completion of each accounting year after
declaration of final rate of profit.

i) Mudaraba Waqf Cash Deposit Account: The major features of this account are as
follows:
IBBL has introduced Mudaraba Waqf Cash Deposit Account through which fund is
pooled for the purpose of Waqf from the well-off and the rich people of the society. The
income to be generated thereon may be spent for different benevolent purposes including
various religious, educational and social services.
Under this scheme one may create Cash Waqf at a time or may start with a minimum
deposits of Tk.10,000/- only and the subsequent deposit shall be made by installment(s)
in Thousand Taka or in multiple of thousand Taka. The highest weightage is given here
for encouraging Waqf system of Islam which is now 1.35. Profit from this account is
utilized as per instruction of the Accountholders.

j) Mudaraba Foreign Currency Deposit (Savings) Account: Mudaraba Foreign Currency
Deposit Account has been introduced by IBBL under Mudaraba principle. The following
categories of people can open this account.
Bangladeshi nationals residing, working and earning abroad;
Foreign nationals residing in Bangladesh and also foreign companies registered abroad
but operating in Bangladesh; and
Foreign missions and their expatriate employees.



40
3.1.1.1.2 ACCOUNT CLOSING:
First a customer has to submit an application with his/her signature mentioning that he/she wants
to close his/her A/C. Then the signature will be verified by the officer. Customer has to certify
by different department (Advance, Foreign Exchange department) of Bank that he/she has no
liabilities to the Bank. After that the Customer's A/C is debited and then Bank issue a Pay Order
in the name of A/C holder.
3.1.1.1.3 ACCOUNT TRANSFER:
Customer has to submit an application mentioning that he/she wants to transfer his/her A/C to his
desired Branch and the officer will verify the signature, Customer has to be certified by different
department of Bank that he/she has no liabilities to the bank. Then total particulars of A/C holder
will prepare and sent to the Customer's desired branch. Liability of Recognizer is secondary and
account holder is Primary.

3.1.1.2 BILLS & REMITTANCE:
The word Remittance originates from the word remit which means to transmit money/ fund.
In banking terminology, the work remittance means transfer of fund one place to another. When
money transferred from one country to another is called Foreign Remittance
3.1.1.2.1 TYPES OF REMITTANCE:
Foreign remittance may be classified into.
I. Inward Foreign Remittance.
II. Outward Foreign Remittance.
3.1.1.2.2 MECHANISM OF REMITTANCE:
FCAD- Foreign currency A/C Dollar.
FCAP- Foreign currency A/C Dollar.
MFCD- Mudaraba foreign currency deposits.
PFC- Private foreign currency.
FCAD- Exp.- Foreign currency A/C dollar export.


41
NRO- Non residence dollar.
NRT- No residence Taka.
PDAP- properly development A/C dollar.
PDAP- properly development A/C pound.

3.1.1.2.3 INSTRUMENTS OF FOREIGN REMITTANCES:
Cash for : Dollar, Pound, France Fr. Riyal or any other currency.
T.C. : Travelers Cheque.
F.D.D : Foreign Demand Draft.
T.T : Telegraphic Transfer, Cable transfer or swift transfer.
M.T : Mail Transfer.
I.M.O : International Money Order.
Cheque : By any person & institution..
P.O : Payment Order.
3.1.1.2.4 LOCAL REMITTANCE
Remittance represents transmission/transfer of money from one place to another. Local
remittance represents remittance that takes place within the territory of a country.
Banks have a wide network of branches all over the country and offer various types of remittance
facilities to the public/customer/client etc.
3.1.1.2.5 MODES OF LOCAL REMITTANCE:
There are four modes of remittances which are as under:
DD - Demand Draft
TT - Telegraphic Transfer
PO - Payment Order
Online banking



42
I. Demand Draft
According to Section 85 (A) of the Negotiable Instruments Act, a demand draft is an order to
pay money drawn by one office of the bank upon other office/branch of the same bank for a sum
of money payable to order on demand.
a) Issuance of DD
A prescribed Application Form bearing No. F-20 is required for effecting remittance through D-
D and the following columns should be filled in properly:
Name and address of the applicant.
Telephone No. (if any).
Date
Signature of the applicant
Name of the payee
Drawee branch
Amount in figure and words.
Commission is to be realized /charged as per Head Office circular.
At present min. Tk. 23/-
For Tk. 1-20,000 (Com. 20+Vat 3), but for Tk.
20,001 and above Tk. 1/thousand and vat @ 0.15%.

b) Payment of Draft
The drawee branch should exercise proper care while paying drafts.
When the draft is presented to the drawee branch for payment, the particulars of the draft
is/are checked with the advice and signature (s) therein to be verified.
Payment of the DD has not been stopped is to be ensured
Verification of Test no, if any, is to be done
If the DD issued for cash payment A/c. Payee' rubber stamp should be cancelled and a
letter requesting the drawee branch to pay the DD in cash should be issued under sealed
cover and signature of the payee should be attested.
DD Advice should be sent on the same day.


43
The drawee branch should ensure that the payment of the instrument is made in due
course.
As the demand draft is payable to order it is duty of the paying branch to obtain
identification of the payee if payment is desired over counter.
If the DD is presented through a bank, the endorsement(s) appearing on the instrument
should be prima-facie in order of certification by the collecting banker.

c) Cancellation of Draft
Sometimes the purchaser returns the draft to the issuing branch and requests for payment
by cancellation thereof. In such case we must make sure that the request is from the
genuine purchaser, that the draft was issued by him and is not a fake one and that he has
not already issued a duplicate thereof. However, if the purchaser of the draft makes a
request to cancel the draft and refund him the amount of draft, the bank should do so after
taking the following precautions:-
Bank should satisfy itself that the draft has not been delivered to the payee. Section 46 of
the NI Act states that the making, accepting and endorsement of a negotiable instrument
is completed only when it is delivered to the person concerned. Thus, a banker should
refuse to cancel the draft, if it is found that the draft has been delivered to the payee. As a
matter of fact, the purchaser losses the right of getting the draft cancelled as soon as he
sends the drafts to the payee. If the purchaser wants to get the draft cancelled after
delivering it to the payee he can do so only with the consent of payee.
If the draft is sent by post, the act of posting itself proves the delivery of the draft to the
payee. This is because the post office is taken as the agent of the payee of the draft.

II. TT (Telegraphic Transfer)
Telegraphic transfer is so far the quickest method of transferring funds from one place to
another. Sometimes, the remitter of the funds requires the money to be available to the payee
immediately. In that case the banker is requested by the remitter to remit the funds over
telephone. It is an instruction conveyed by telegraph/telex/telephone to the drawee branch for
paying certain amount of money to a specified person.


44
a) Issuance of TT
TT application form (F-22) is to be filled in by the remitter with full particulars signature of the
remitter is to verify by the bank's officials. Money to be received in cash or by debiting remitters
account with commission and Telex/Telephone charges. Entry should be given in B-44 branch
wise serially under supervision of authorised official. Message to be passed immediately to the
drawee branch under secret test by Telex, Telephone, Telegram followed by IBCA for
confirmation. Cost memo F-23 to be issued and handed over to the client.


b) Payment of TT
The amount transferred by TT is either credited to the account of the beneficiary, if he/she
maintains an account, or paid by means of a TT payment order if he/she does not maintain an
account. Cash is paid to the beneficiary on proper identification, if he/she has no account.
III. Payment Order
Payment order is meant for making payment of the bankers own or of the customers dues
locally and not for affecting any remittance to an out station. In a sense, the payment order is
used for making a remittance to the local creditors.
a) Issue and Payment of Payment Order
F-19, should be filled in properly by the customer. Total amount should be deposited through
cheques/cash. Commission to be realised as per banks circular:
From Tk. 1/- upto Tk. 10,000/- Tk. 15/-
From Tk. 10,001/- upto Tk. 1,00,000/- Tk. 20/-
From Tk. 1,00,001/- upto Tk. 5,00,000/- Tk. 30/-
From Tk. 5,00,001/- upto Tk. 10,00,000/- Tk. 40/-
From Tk. 10,00,001/- and above Tk. 50/-


45
Printed Payment Order leaf should be filled in as per F-19 and signed by two authorised
officers.
The instrument should be handed over to the purchaser.
Payment Orders are required to be discharged by the beneficiary, where applicable on
revenue stamp of appropriate value against in cash or through account.

IV. Online Banking:
IBBL is the only bank in Bangladesh that has developed and implemented core banking software
eIBS having online features by its own software engineers based on open source technology and
oracle. The online banking section of IBBL does the following activities:
Post all kinds of online related vouchers
Post all kinds of deposits accounts
Issue balance confirmation letter to the A/C holder
Check daily computer transaction list
Prepare IBCA/IBDA vouchers etc.



46
3.1.1.3 CLEARING AND COLLECTION SECTION:
As far safety is concerned customers get crossed check for the transaction. As we know crossed
check cannot be encased from the counter rather it has though been collected through banking
channel i.e. clearing. A client of IBBI received a check of another bank, which is located with in
the clearing range deposit, the checks in account at IBBL New IBBL will not the money until the
check is honored.
3.1.1.3.1 TRANSFER DELIVERY:
Transfer delivery is a cheque collection procedure among internal branches within the Clearing
House. When a cheque is of a Branch Office is deposited to another Branch Office, then
collecting branch on that date sends that cheque to their, Local Office, sends that cheque to that
respective branch and takes necessary action for honoring cheque.
If the cheque is dishonored then authorized branch send the cheque to the local office and Local
Office send that cheque to the collecting branch on the collecting date.
Here Clearing house function is not required because transactions occur among the same branch
of same Bank within the Clearing House.
3.1.1.3.2 CHEQUE OF SAME BRANCH
If the cheque is of a Branch Office of a Bank (within the Clearing House of same city) then the
collection branch send the cheque to the authorized branch/drawn on branch and issues an IBCA
to the collecting branch. On the other hand, if the cheque is of another Bank (outside of Clearing
House to another city) then cheque collecting branch will find out whether any branch office of
the collecting branch situated near to Authorized branch. If yes, then cheque collecting branch
will send the cheque to the branch office near Authorized branch, that branch (near Authorized
branch) office collect the cheque from drawn on branch and issues an IBCA. If not, then the
collecting branch will send that cheque to the Authorized branch, after that Authorized branch
will send a DD with mentioning the name of their branch office near collecting branch and
collecting branch will collect that cheque thereby.



47
3.1.1.3.3 OUTWARD BILLS FOR COLLECTION (OBC)
Customers deposit check draft etc for collection attaching with their deposit sleep. Instrument
within the range of clearing arc collected through local clearing house but the other which are
outside the clearing range are collected through OBC mechanism. A customer of IBBL principal
branch local office Dhaka is depositing a check of Sonali bank Coxs-Bazar. New as a collecting
bank IBBL principal branch will perform the following task.
I. Received seal on deposit slip.
II. IBBL local office principal branch crossing indicating them as collecting bank.
III. Endorsement give payees A/C will be credited on realization.
IV. Entry on register from where a controlling number is given.
Collecting bank can collect it either by its branches of by the drawer's bank they will forward the
bill then to that articulate branch. OBC number will be given on the forwarding letter.

3.1.1.3.4 INWARD BILLS FOR COLLECTION (IBC)
In this case bank will work as an agent of the collection bank branch receives a forwarding letter
and the bill. Next steps are:
I. Entry in the IBC register, IBC number given.
II. Endorsement given- "our branch endorsement confirmed".
III. The instrument is sent to clearing for collection.
IV. Miscellaneous creditor A/C.
Now following procedures will take place in case of the following two cases.
3.1.1.3.5 BILLS COLLECTED THROUGH BRANCH
If the bill is forwarded to a branch they will collect it through IBC procedure. Collecting branch
will receive and l.B.C.A from that particular agent branch according treatment from the angle of
collecting branch will be.
H.O. A/C concerned branch..................................................... Dr
Customer A/C........................................................................... Cr


48
Income A/C commission; postage............................................ Cr
In this case commission will be charged by the collecting branch, not the agent branch.
3.1.1.3.6 BILLS COLLECTED THROUGH DRAWER'S BANK
Accounting treatment for the collecting branch will be
Clearing............................................................................... Dr
Customers A/CC................................................................. Cr
3.1.1.3.7 INWARD BILLS FOR COLLECTION (IBC)
In this case bank will work as an agent of the collection bank. The branch receives a forwarding
letter and the bill. Next steps are.
Entry in the l.B.C register, I.B.C number given.
Endorsement given - "Our branch endorsement confirmed
The instrument is sent to clearing for collection................... Dr
Miscellaneous Creditor A/C OBC......................................... Cr
3.1.1.3.8 INTER BRANCH GENERAL ACCOUNT (IBG A/C)
This is Branch transaction settlement account through Central Accounts Department (CAD). IBG
statement of Branch is of two kinds:
I. Originating Branch
From where IBCA (Inter Branch Credit Advice) or IBDA (Inter Branch Debit Advice) is send to
other branch that branch is called Originating Branch.
II. Credit Transaction
Cheques are deposited for payment in a branch that branch sends those cheques or other financial
instrument to Clearing House for clearing. After clearing those cheques or financial instruments
collecting branch makes payment against those financial instruments, before paying this branch
as Originating Branch sends an IBDA to the Authorized Branch/Responding BranchIf those
financial instruments are dishonored then respective parties are not paid and authorized


49
Branch/Responding Branch again sends an IBDA to the Originating Branch. These returned
financial instruments advice are recorded in the Credit side of the IBG A/C.
III. Debit Transaction
When some cheques or any sort of financial instrument of another branch are deposited in a
branch and this branch pays those instruments on behalf of authorized branch, issues an IBDA to
that branch and these transactions are recorded in the Debit side of IBG A/C.
IV. Responding Branch
When a branch responds against an IBCA or an IBDA that branch is called Responding Branch.
V. Debit Transaction
In case of responding transactions, say a customer wants to draw any sort of financial instrument
of a branch to some other place at his/her convenient then authorized branch of that financial
instrument issues an IBCA to that "Drawn On" branch. Here "Drawn On" branch of Responding
Branch pays on behalf of Originating Branch and record all transactions in the Debit side of the
IBG A/C.
VI. Teller Customers Relationship
In a bank a person who delivers and receives cash from the cash counter is known as teller a
customer meets most of the time in a bank with a taller on the counter.
So teller should hold certain quality should be friendly, provided prompt service and be accurate
in his task.
VII. Evening Banking:
After the banking hour the cash counter is closed. But sometimes customers come to draw or
deposit money after the service hour. However their money is received or paid recorded in the
next daybook. This is known as evening.



50
3.1.1.4 CASH SECTIONS:
Cash section demonstrates liquidity strength of a bank. It also sensitive as it deals with liquid
money. Maximum concentration is given while working on this section. As far as safety is
concerned specials precaution is also taken. Tense situation prevail if there is any imbalance in
the case
I. Cash receipt
II. Cash payment
III. Issuance of Cheque book
IV. Passing, Cancellation, and payment of Cheque.
V. Vault Maintain:
All cash instruments (PO, DD, Check) and other valuables are kept in the vault is insured
up to Tk. 4 core with a local insurance company. If cash stock goes beyond its limit of
Tk. 4 core the excess money is transferred to Bangladesh bank if there is shortage of cash
during transaction period money is transferred to drawn from the central bank. There are
three keys of the vault, which are given to three seniors most officers. Daily an estimated
amount of cash is brought out from the vault for transaction purpose. No more than Tk. 4
core brought at once from the vault on a single day.
VI. Cash Packing and Handling
Cash packing and handling needs a lot of care as any mistake may lead to disaster.
Packing after banking hour when the countries closed cash is packed according to
denomination. Notes are counted several times and packed in bundle Stetted and stumped
with initial.





51
3.1.2 INVESTMENT SYSTEM OF IBBL
The most important difference between the Conventional and Islamic bank is that both the banks
operate to earn profit but they differ in the way of operation. Islami Bank emphasis on legitimate
(Halal) business. On the other hand traditional bank is not operated by the following rules and
regulations approved by Islam that is the most powerful contradiction between them. Islamic
Bank does not invest in loans and fixed interest securities. It can invest in ordinary share only
while interest based bank can invest in loans and different kinds of securities. Islami Bank
establishes and participate projects with its client as a partner and bears the risk along with the
client on a proportionate basis. Besides, other conventional banks sometimes finance projects but
do not bear risk. Finally, the concept of Islamic Bank is to establish on egalitarian society based
on principles of social justice and equity. Whereas traditional banks pay a fixed interest on
savings, time deposit and grant loans with interest for any purpose. We have gathered the fact
that investment management is the theme of IBBL. The bank takes deposits and invests the same
based on the profit-loss sharing. Bank go for the investment mainly which are long term and
profitable in nature. IBBL also give high concentration on the investment that will generate more
employment. As investment is one of the most priority areas for the IBBL, so it needs to cautious
in investment decision. To ensure proper investment IBBL always go with in-depth study before
making the investment.

3.1.2.1 INVESTMENT OBJECTIVES OF IBBL
The objectives and principles of investment operations of the Banks are:
I. The investment fund strictly in accordance with the principles of Islamic Shariah.
II. To diversifies its portfolio by size of investment, by sectors (public and private), by
economic purpose, by securities and by geographical area including industrial,
commercial and agricultural.
III. To ensure mutual benefit both for the Bank and the investment client by professional
appraisal of investment proposals, judicious sanction of investment, close and constant
supervision and monitoring therefore.
IV. To make investment keeping the socio-economic requirement of the country in view.


52
V. To increase the number of potential investors by making participatory and productive
investment.
VI. To finance various developments schemes for poverty alleviation, income and
employment generation with a view to accelerating sustainable socio-economic growth
and upliftment of the society.
VII. To invest in the form of goods and commodities rather than give out cash money to the
investment clients.
VIII. To encourage social upliftment enterprises.
IX. To shun even highly profitable investment in fields forbidden under Islamic Shariah and
is harmful for the society.
X. The Bank extends investments under the principles of Bai-Marabaha, Bai-Muazzal Hire
purchase under Shairkatul Melk and Musharaka. The Bank is making sincere efforts to go
for investment under Mudaraba principle in near future.

3.1.2.2 INVESTMENT POLICY OF IBBL

Investment operation of a Bank is very important as the greatest share of total revenue is
generated from it, maximum risk is centered in it and the very existence of a Bank mostly
depends on prudent management of its Investment Port-folio.
For efficient deployment of mobilized resources in profitable, safe and liquid sector a sound,
well-defined and appropriate Investment Policy is necessary.

The important feature of the investment policy of the Bank is to invest on the basis of profit-loss
sharing system in accordance with the tenets and principles of Islami Shariah. Earning of profit is
not the only motive and objective of the Banks investment policy rather emphasis is given in
attaining social good and in creating employment opportunities.

Pursuant to the Investment Policy adopted by the Bank a 7-year Perspective Investment Plan has
been drawn-up for the year 1995 to 2002 and put into implementation. Recently a further 5-year
perspective investment plan has been drawn up for the year 2003 to 2007 and put into
implementation. The plan aims at diversification of the investment port-folio by size sector


53
geographical area, economic purpose and securities to bring in phases all sectors of the economy
and all types of economic groups of the society within the fold of Banks investment operations.

A sound well defined, well planned and appropriate investment policy frame work is a pre-
requisite for achieving the goal of the Bank i.e. implementation and materialization of the
economic and financial principles of Islam in the Banking area and justice in trade, commerce
and industry and to build socio-economic infrastructure, create opportunity for income and
sustained economic growth of the country.

3.1.2.3 INVESTMENT STRATEGIES
Risk in the investments and return thereon are interrelated. An investment policy that emphasizes
a high return must accept relatively high risk. Conversely, an investment policy that will tolerate
only small amount of risk must be prepared to accept a relatively low return.
As such, it is really difficult whether to select a high return port-folio on high risk or low risk
port-folio with a low return.
Nevertheless, considering all aspects following guidelines shall be followed as strategy for banks
investments.
I. If two port-folios have the same risk but different returns, the port-folio having higher
return shall be preferred.
II. If the two port-folios have the same expected returns, but different degrees of risk, the
port-folio with lower risk shall get preference.
III. If one port-folio has both a higher return and a lower risk than another, the first port-folio
shall be preferred.
IV. Keeping in view the risk factor, the bank shall maintain flexibility in determination of
rate of return on investments on case to case basis in consideration of the risk element
involved in the respective investment.
V. Emphasis is given for expansion and strengthening cottage and small industries sector
and rural industries. This immensely potential industrial sub-sector shall create
employment opportunities to rural and semi-urban population and shall have positive
contribution in employment and income generation and poverty alleviation of the low-
income group.


54
VI. Investment facilities shall be extended for establishment and expansion of export oriented
forward / back ward linkage and import substitute industries.
VII. The bank requires retaining 10% of its total deposit liability as Statutory Liquidity Ratio
(SLR) including 4% Cash Reserve Ratio (CRR) with the Central Bank. The bank may go
for investments up to 90% of its total deposit. The perspective investment plan is being
formulated quantifying the allocation of investments size-wise, sector-wise, geographical
area-wise, economic purpose-wise, security-wise and mode-wise keeping in view 20%
projected growth of deposit each year.
VIII. Taking into consideration the broad objectives of the bank, national priority, socio-
economic need, growth level of the economy, the investments port-folio of the bank may
gradually be diversified and allocated in term of size, sector, geographical area, economic
purpose, security and mode.
IX. Safety, security, profitability and liquidity of Banks investments.
X. Each branch invests, at least 50% of its deposits locally.
XI. Enhance of extending limit of good investment clients.
XII. Adopting of modern technology

So, banks investment policy, investment planning and investment budgeting, till situation
changes / improves, shall aim at promotion of quality general investment.
3.1.2.4 SALIENT FEATURES OF INVESTMENT OF IBBL
I. Observance of the legal investment limit of the bank.
II. Observance of the legal investment limit of the client.
III. Optimum utilization of investible fund.
IV. Profitability of the investments.
V. Safety and security of the investments.
VI. Investment at minimum possible risk.
VII. Liquidity of investments.
VIII. Conform to central banks investment restrictions.
IX. Preference to short term investments.
X. Preference to the investments for small size.
XI. Satisfactory return on investments.


55
a) Bai-Murabaha
b) Bai-Muajjal
c) Bai-Salam
d) Istishnaa
a) Mudaraba
b) Musharaka
a) Hire Purchase
b) Hire Purchase
Under shirkatul Melk
Bai- Mechanism Share Mechanism Ijara Mechanism
XII. To take in view, inter alias, the following points while considering an investment
proposal.


3.1.2.5 INVESTMENT MECHANISM OF IBBL









3.1.2.6 INVESTMENT MODES OF IBBL
3.1.2.6.1 BAI- MURABAHA (SALE ON AGREED UPON PROFIT)
Bai-Murabaha may be defined as a contract between a Buyer and a Seller under which the Seller
sells certain specific goods (permissible under Islamic Shariah and the Law of the Land) to the
Buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump sum or by
installments.
3.1.2.6.2 BAI-MUAJJAL (SALE ON DEFERRED PAYMENT BASIS)
Bai-Muajjal may be defined as a contract between a buyer and a seller under which the seller
sells certain specific goods (permissible under Islamic Shariah and the law of the land), to the
buyer at an agreed fixed price payable at a certain fixed future date in lump-sum or within a fixed


56
period by fixed installments. The seller may also sell the goods purchased by him as per order
and specification of the buyer.

3.1.2.6.3 BAI-SALAM (PURCHASE OF GOODS ON DEFERRED DELIVERY BASIS):
Bai-salam is a contract between a buyer and a seller under which the seller sells in advance the
certain commodity (ties)/product(s) (permissible under Islamic Shariah and the Law of the land)
to the buyer at an agreed price payable on execution of the said contract and the commodity
(ties)/ products(s) is/are delivered as per specification, size, quality, quantity at a future date and
time in a particular place. In other word, Bai-Salam is a sale whereby the seller undertakes to
supply some specific commodity (ies) product(s) to the buyer at a future time in exchange of an
advance price fully paid on the spot.
3.1.2.6.4 BAI- ISTISNAA:
Istisnaa is a sale contract by which al-sani (the seller) on the basis of the order placed by al-
mustasni (the buyer) after having manufactured or otherwise acquired al-masnoo (the goods)
as per specification and sells the same to al-mustasni for an agreed upon price and method of
settlement whether that be in advance, by installments or deferred to a specific time. It is a
condition of Istisnaa contract that the seller should provide either the raw material or the
labour.
Bai-Assarf:
Under this mode the bank Bai-Assarf is related with foreign currency buying and selling.
engaged with buying and selling of foreign currency.
3.1.2.6.5 HIRE PURCHASE /IJARAH
The term Ijarah has been derived from the Arabic works Ajr and Ujrat which means
consideration, return, wages or rent. This is really the exchange value or consideration, return,
wages, rent of service of an Asset. Ijarah has been defined as a contract between two parties, the


57
Hiree and Hirer where the Hirer enjoys or reaps a specific service on benefit gainst a specified
consideration or rent from the asset owned by the Hiree. It is a hire agreement under which a
certain asset is hired out by the Hiree to a Hirer against fixed rent or rentals for a specified
period.

3.1.2.6.6 HIRE PURCHASE UNDER SHIRKATUL MELK
Hire purchase under shirkatul Melk is a special type of contract which has been developed
through practice. Actually, it is a synthesis of three contracts: Shirkat, Ijarah and sale. Shirkat
means partnership. Shirkatul Melk means share an ownership. When two or more persons supply
equity, purchase an asset, own the same jointly, and share the benefit as per agreement and bear
the loss in proportion to their respective equity, the contract is called Shirkatul contract.
Stages of Hire Purchase under Shirkatul Melk
Thus Hire Purchase under Shirkatul Melk Agreement has got three stages:
I. Purchase under joint ownership.
II. Hire and Sale and /or transfer of ownership to the other partner Hirer.
3.1.2.6.7 MUDARABA
It is a form of partnership where one party provides the fund while the other provide the
expertise, labor and the letter referred to at the Mudarib any profits accrued are shared between
the two parties on a pre agreed basis, while capital loss in exclusively born by the partner
providing the capital.
3.1.2.6.8 MUSHARAKA
The term Shirkat and Musharakah have been derived from Arabic words Shairkah and
Sharika. The word shirkah means a partnership between more than one partner. Thus the ward
Musharaka and Shirkat means a partnership established between two or more partners for
purpose of a commercial venture participate both in the capital and management where the profit


58
may be shared between the partners as per agreed upon ratio and the loss. If any incurred, is to be
borne by the partners at per capital /equity ratio.
In case of investment Musharaka meaning a partnership between the bank and the client for a
particular business in which both the bank and client provide capital at an agreed upon ratio and
bear the loss, if any in proportion to their respective equity.
Bank may move itself with the selected client for conducting any Shariah permissible business
under Musharaka mode.

3.2 OTHER ACTIVITIES:
To perform collecting deposit and providing Investment IBBL perform lots kinds of activities
like-
3.2.1 OTHER GENERAL BANKING OPERATIONS OF IBBL

I. Sale of Share: Islamic banks sell primary shares of a company registered with the Stock
Exchange in exchange for a commission. This contributes to the raising of capital for a
company. Companies make arrangements with Islamic Banks to issue shares for public
subscriptions. These are known as new issues which a company intends to sell to the
public. Islamic banks are the most effective method of selling the shares to the public.
II. Transfer of Money: Islamic banks transfer money from one place to another place as per
the order of its customers through Mail Transfer (MT), Telephonic Transfer (TT),
Demand Draft (DD), and Pay Order (PO). They receive a fee or commission for
performing such services. Customers benefit from these services, as it helps them to fulfill
their financial needs timely.
III. Maintenance of Budget Accounts: Islamic banks can maintain budget accounts for their
customers. Laborers, who earn regular monthly wage, may deposit money into a budget
account. The bank pays the clients bills such as: taxes and donations for example, on the
clients behalf. Thus the client benefits because his financial affairs are handled


59
automatically and his monies are set-aside on a monthly basis to handle bills that are due
quarterly or annually. In exchange the bank receives a fee for providing this service. Only
the Al Wadiah Current account and Mudaraba Savings account holders can maintain
budget accounts with Islamic banks.
IV. Settlement of Transactions: Islamic banks pay Bills of Exchange, and Checks of their
customers to settle transactions with third parties. Thus, financial relations between the
bank and its customer, and the customer and any third party (the Beneficiary) of the bill or
check are maintained.
V. Providing Bank Guarantee: A bank guarantee is a written agreement that guarantees the
performance or payment of debt by a bank client to a third party. Under the agreement, if
the customer fails to perform in the capacity stipulated, the bank is held responsible for
ensuring performance or payment of debt. Islamic Banks provide this guarantee based
upon cash held on deposit by taking a mortgage on other assets. In some cases the bank
can act as a guarantor taking a partial mortgage on an unsecured basis. Some Islamic
Banks receive a commission based on the lower of 2% or 3% of the amount guaranteed or
simply incidental expenses.
VI. Account Maintenance Activities: The opening of an account is the beginning of the
relationship between a banker and a customer within the framework of banking deposits.
The account is established with a standard proforma contract, which must be signed by the
customer who wishes to deal with the bank concerned. A number of subsidiary operations
are related to the account opening operation, such as the receipt of deposits into the
account, payment of checks drawn on the bank and the execution of bank transfers and
payment orders. Furthermore, among the services rendered, the bank must prepare and
communicate to its customer periodic statements of the account.
VII. Safe Custody: A safe custody account is a small box, which is maintained in a secured
area within the bank. This box is adjoined to other boxes belonging to other customers of
the bank. Each box has two keys. The banker has a key and the customer has a key. Both
keys must be used simultaneously to open the safe custody box. Thus, the client is assured
his assets are safe in the custody box due to the dual control. Clients may access their box
during normal business hours and can step into a private room in order to add items of
value to the safe custody box or remove items from the safe custody box. Islamic Banks


60
charge a relatively low fee for this service. The main objective of offering this service is
one of convenience which the bank hopes will attract additional customers.
VIII. Opening of L/C: Islamic Banks also offer Letters of Credit (L/C) for domestic and
international trade on a commission basis. Thus, they facilitate business relationships
between importers and exporters through this service.
IX. Issue of Solvency Certificate: Islamic banks issue solvency certificates to their
customers as per an order received. This certificate is required for business purposes, to
acquire assets on an installment basis, or to go abroad for study.
X. Business Advising Service: Islamic Banks can provide business-advising services (BAS)
to its clients as well. The bank offers counseling on technological issues, marketing and
other important business information to industrial entrepreneurs of small and medium
sized business of any nature. A banker should be an expert in banking as well as in
business to provide BAS. Moreover, he will conduct an extensive survey of the
customers business.
XI. Transaction of Foreign Currency: Islamic banks buy and sell foreign currencies. They
allow their customers to draw local currency against foreign currency deposited in a
foreign currency account with the bank.
XII. Publication Works: Islamic banks publish books, journals, booklets, pamphlets to
advertise the banks services. Important information related to trade, commerce and
industry are published in these forums to address the needs of the banks customers. Such
services have created social awareness about Islamic banking in the economy. Today,
more people are familiar with the terms of Islamic banking like Bai-Murabaha, Mudaraba,
and Musharaka. In addition, they also know the special features of the Islamic Economy.
XIII. Exchange of Information: Islamic banks exchange information with other banks,
organizations and individuals pertaining to the credit worthiness of its customers. In
addition, banks seek this information prior to extending a loan to a prospective customer.
Thus the bank can be assured it has made a good decision on whether or not to make the
loan to the customer.
XIV. Financial help: Islamic banks provide financial help to different organizations through
paid advertisements describing various services that the bank offers. These advertisements


61
increase the competitiveness of Islamic banking products in the market by creating
awareness among the people.
XV. Issue of Qard Cards: Islamic banks can issue Qard Cards (QC) unto certain limits to
their valued customers. The card will enable a holder of it to purchase goods from the
market without cash or a check. The merchants indicate clearly which cards they will
accept. At the point of purchase, the Cardholder presents his card to the merchant who
runs the card through a special machine, which imprints account information on a form to
be signed by the Cardholder. Thus, a customer can make his purchase without having to
pay cash on the spot. In addition, the (QC) can also be used like an ATM card at
participating banks.
XVI. Issue of Travelers Cheques: Islamic banks also issue Travelers Cheques (TC). These are
special types of cheques drawn on the issuing bank and signed by the person to whom
they are issued. The issuing bank guarantees the payment of these cheques. Thus, it is
accepted worldwide without a question. When the item is presented for payment, the
person to whom it was issued needs to countersign it. The signature should be similar to
the one that already appears on the cheque. Normally a passport is required as proper
identification when the check is being used for payment. If a TC is lost or stolen it can be
replaced again through a local branch/agent of the issuing bank subject to verification of
the signature.
XVII. Factoring Service: The factoring agreement covers assessment of creditworthiness of all
potential buyers and provides complete protection against bad debt, provided the credit
limits are not exceeded. The small and medium sized business houses benefit from this
service of Islamic banks. In exchange for this service, these businesses pay a service
charge or commission to the bank. As part of this service, the bank will maintain sales
ledger records, and control the finances of the clients business house. This makes
business easier for the wholesalers.



62
3.2.2 SPECIAL SCHEMES UNDER INVESTMENT MODES
I. Household durable scheme:
Islami Bank Bangladesh Limited has introduced Household Durables Investment Scheme which
has already created great enthusiasm among the people and received tremendous response from
them. Objectives are to assist the service holders with limited income in purchasing household
articles such as.
II. Investment scheme for doctors:
A good number or newly graduated doctors from Medical Colleges are unemployed. Many of the
medical graduates are waiting for job because the opportunity for Government service is limited.
If these young doctors could be self-employed by extending investment facilities, they could
make modern facilities available at the door-steps of rural people.
In view of the above facts, Islami Bank Bangladesh Limited has taken the initiative an
introduced the " Doctors Investment Scheme" to ensure modern treatment and medical facilities
available to the people through extension of Banks investment facilities for self-employment of
newly graduated doctors and at the same time extending investment facilities to the established
medical practitioners to procure modern and sophisticated medical equipment.
III. Small business investment scheme
Bangladesh a third-wood developing country is rich in natural and human resources. In spite of
vast possibilities, the majority people of the country live in hardship-below poverty tapped,
explored and exploited. Physical labor is their only means of earning. A large segment of this
populace is active youth force. Many of them are efficient, intelligent and energetic with
initiative & drive and have courage to tale risks. But they can not uplift their socio-economic
condition due to poverty, lack of financial support and other required facilities.




63
IV. Housing investment scheme
One of the basic human needs is to have a house to live in. A house is in an abode of peace and
happiness. Housing has now become an acute problem in the country, especially in the towns,
cities and metropolis. With their limited income, it has become almost impossible on the part of
the lower middle class, middle class and sometimes, even for upper middle class to solve their
housing problem. To meet this basic human need, Islami Bank Bangladesh Limited is committed
to contribute to this end to provide a peaceful and happy
V. Real estate investment program
Professionals, Service-holders, Businessmen, Real Estate Developer and other categories of
people who are not entitled for availing investment facilities under Housing Investment Scheme,
shall be eligible under this programme Investment is to be extended to build new houses and for
extension/ completion of the house already constructed, commercial building, shopping complex,
flat apartment etc.

VI. Transport investment program:
Under this scheme, investment in being allowed to the existing successful businessmen and
potential entrepreneurs in this sector for all types of road and water transport with simple and
easy terms and conditions. The bank is also extending investment facilities to multinational
companies, established, business houses and well to do officials and professionals for acquisition
of private cars, microbus and jeeps.
VII. Car investment scheme
Car is considered as on essential mode of transport in the modern society, particularly by a
section of the officials, business houses and business executives and established professionals for
movement in discharging their duties and responsibilities punctually and efficiently. Many of
these categories of people cannot purchase a car on payment of entire purchase value at a time
out of their own sources. To meet this need Islami Bank has introduced the Car Investment
Scheme for the mid and high ranking officials of government and semi-government


64
organizations, corporations; executives and directors of big business houses and companies arid
also for persons of different professional groups on easy payment terms and conditions.
VIII. Rural development scheme of IBBL
Islami Bank Bangladesh limited (IBBL) envisages an economic system based on equity and
justice. Taking into consideration that majority of the population below poverty line lives in rual
Bangladesh, the Bank has devised a Rural Development Scheme (RDS) with a view to creating
employment opportunity for them and alleviates their poverty through income generation
activities.
The IBBL through its RDS project has been implementing integrated programs for the landless
poor, eager laborers and marginal farmers aimed at meeting their basic needs and promoting
their comprehensive development. Consciousness among the poor needs should be enhanced so
that they can lift their position in the socio-economic structure of the country. In order to
consolidate their economic base, invested money should be used in income generating activities
so the poorer section of the population can become self-reliant. RSD works for the realization of
that objective.
IX. Agricultural implements investment scheme:
Bangladesh is predominantly an agricultural country with vast majority of people living in rural
areas. Most of our people for their living are dependent on agriculture. Agriculture still
contributes the lion share of the gross domestic product. But we could not as yet become self-
sufficient in food production. We still import a bulk quantity of food grains from abroad to meet
the deficit. We must modernize our agriculture and establish more and more industries in order
to minimize imports
The Bank has introduced Agriculture Implements Investment Scheme" to provide power tillers,
power pumps, shallow tube-wells, thrasher machine etc. On easy terms unemployed youths for
self-employment and to the farmers help augment production in agricultural sector.




65
X. Micro industries investment scheme
Islami Bank Bangladesh Ltd. has been appreciably participating in this direction by financing
industrial sector. With a view to creating wider base for industries, the Bank has decided to
launch "Micro Industries Investment Scheme" through its Branches
3.3 ORGANIZATION-WIDE ACTIVITIES:
IBBL offers some special services to its values customers-
3.3.1 ATM SERVICES
Automated Teller machine (ATM), interlaid, and has unveiled the horizon of Electronic banking
of 21
st
century. Through ATM, customers can avail non stop online teller service without going
to the specific branch of the member bank.
3.3.2 SWIFT
Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT) is a bank owned co-
operation serving the financial community worldwide. The SWIFT Transport Network (STN) is
dedicated global network for secure communication between SWIFT customers.
IBBL has introduced this SWIFT alliance entry system firstly in October 1999 and introduced
SWIFT alliance access in October 2001.

3.3.3 CORPORATE SOCIAL RESPONSIBILITY
1. Tree Plantation
2. Awarding meritorious students
3. Supporting families of the martyred Army Officers
4. Assistance to the Cyclone (Sidr, Aila) affected people
5. Scholarship program
Islami Bank Service Centre 6.


66
3.3.4 WELFARE ACTIVITIES BY ISLAMI BANK FOUNDATION
1. 6 modern Hospitals and 8 Community Hospitals
2. Distressed Women Rehabilitation Centre
3. Service Centre for vulnerable people
4. Grant for Medical treatment
5. Grant for sustenance & marriage
6. 6 Vocational Institutes including Islami Bank Institute of Health Technology
7. Islami Bank Physiotherapy and Disabled Rehabilitation Centre
8. Islami Bank Medical College
9. Islami Bank Homeopathic Clinic
10. Islami Bank Nursing Training Institute
11. Islami Bank International School and College
12. Monorom: Islami Bank Crafts & Fashions
13. Scholarship to the poor and meritorious students
3.3.5 WELFARE ORIENTED SPECIAL INVESTMENT SCHEMES
1. Household Durables Scheme
2. Housing Investment Scheme
3. Real Estate Investment Scheme
4. Transport Investment Scheme
5. Car Investment Scheme
6. Investment Scheme for Doctors
7. Agriculture Implements Investment Scheme
8. Rural Development Scheme
9. Micro Industries Investment Scheme
10. Women Entrepreneurs Investment Scheme
11. Mirpur Silk Weavers Investment Scheme
12. Equity and Entrepreneurship Fund of Bangladesh Bank


67













4 : PREAMBLE OF GREEN BANKING



68
Global warming, which is one of the most burning & discussed issues, has the worst impact on
the climate of the planet as a whole. The rapid change in climate will be too great to be adapted
by the eco-systems, since the change have already made direct impact on biodiversity,
agriculture, forestry, dry land, water resources and human health. As such, issue of global
warming calls for a global response. Due to unusual weather pattern, rising greenhouse gas,
declining air quality etc. society demands that business also take responsibility in safeguarding
the planet. The key areas of environmental degradation cover air pollution, water
pollution, surface water scarcity, encroachment of rivers, improper disposal of industrial,
medical and house-hold waste, deforestation, loss of open space, loss of biodiversity and
many other issues.
In response to increasing awareness over climate change, environmental degradation,
urgent measures for sustainable development have been addressed by some of the stake holders
all over the world. Banking system hold a unique position in an economy that can affect
production, business and other economic activities through their procedure for financing
activities which would in turn contribute to protect environment/climate from pollution.
Moreover, efficiency in energy use, water consumption and waste reduction may
significantly contribute for operating cost of many of the large banks of the country.
Projects/Businesses those include waste prevention and resource efficiency systems in a
wide range of sectors including community, commercial and business organizations - such
as shopping centers, regional airports, hospitals, construction, farms, a university, public
organizations, and educational organizations are receiving enhanced attention these days.
Green finance as a part of Green Banking makes great contribution to the transition to resource-
efficient and low carbon industries i.e. green industry and green economy in general. Green
banking is a component of the global initiative by a group of stakeholders to save the climate/
environment. Green banks or environmentally responsible banks do not only improve their own
standards but also affect socially responsible behavior of other businesses.


69
4.1 WHAT IS GREEN BANKING
Green Bank means

An ethical bank
A socially responsible bank
A sustainable bank.

Green Banking is to support:

Innovative green products
Activities those are not hazardous to environment and help conserve environment.

4.2 WHY GREEN BANKING

To help safeguard the planet from

unusual weather pattern;
rising greenhouse gas;
Declining air quality.

For ensuring green economic growth: economic growth which is sustainable.
To meet one of the Millennium Development Goals: Ensure Environmental Sustainability.



70
4.3 DEFINITIONS OF GREEN BANKING
4.3.1 IN GENERAL FOCUS:
Green Banking is like a normal bank' which considers the entire social and environmental
factors; it is also called as an ethical bank' Ethical banks have started with the aim of protecting
the environment.
4.3.2 THE BROAD FOCUS:
Green banking refers to the efforts of the Banking sector to keep the environment green and to
minimize greenhouse effects through rationalizing their strategies, policy, decisions and
activities pertaining to banking service, business and in-house operational activities. Green
banking may be seen as a component of the global initiative from Banks end to save
environment. Green banks or environmentally responsible banks do not only improve their own
standards but also affect socially responsible behavior of other business.

Green banking can benefit the environment either by reducing the carbon footprint of consumers
or banks. Either works, some with paper. Either a bank o (a consumer can conserve paper and
benefit the environment. Ideally, a green banking initiative will involve both. Online banking is
an example of this. When a banks customers go online, the environmental benefits work both
ways. Green banking means combining operational improvements and technology, and
changing client habits.
4.3.3 THE DEFINITIONS DERIVED FROM SPECIALISTS:
Sherman stresses (Key Differentiator of Green Choice Bank, Chicago):
With green banking, what sets leaders apart from the rest is...how you invest back in the
community, so we are trying to develop loan products and deposit products that reward good
environmental choices
iii
.


71
Todd Larson (Community investing guide, green America): -a green bank is a logical
extension of -socially responsible investing.
iii

Sherman Stresses, (Key Differentiator of Green Choice Bank, Chicago):
With green banking, what sets leaders apart from the rest are...how you invest back in the
community, so were trying to develop loan products and deposit products that reward good
environmental choices.
ii
Todd Larson (Community investing guide, green America): A green bank is a logical
extension of socially responsible investing.
iii

Justin Pritchard (columnist, about com): Green Bank is a bank focusing on
sustainability. It is bank like others but they are to claim the "green banking niche, and
they hope to excel by serving companies and individuals interested in green business. For
the most part, the bank will work with businesses that find ways to do more and use less.
Pravakar Shahoo (Author, Green Banking in India): The banks should go green and
play a pro-active role to take environmental and ecological aspects as part of their
lending principle, which would force industries to go for mandated investment for
environmental management, use of appropriate technologies and management
systems
4
.
Geoff Green wade, President and CEO, Green Bank (Houston): Green banking means
combining operational improvements and technology, and changing client habits
7
.
Stacy Ayiers (Author, Green banking-a new resource bank): Specific banks designed to
aid environmentally-conscious businesses and consumers with better incentives and loan
rates. Despite the changes in our economic system in business caused by the housing
market, these banks are willing to work with companies who want to empower
sustainability
4
.



72
4.4 CONCEPTUAL DERIVATION OF GREEN BANKING:
Americans are starting to turn to eco-friendly banking as a way to help reduce the carbon
footprint from their normal banking activities. This movement away from branch and paper
banking is being led by green banks that believe in social responsibility. The discussion around
environmental management in financial institutions has until now largely taken place in
industrialized countries. However, in view of the financial globalization and ever increasing
environ-mental regulations, many financial institutions operating in developing and emerging
countries are pressed to better manage risks arising from environmental liabilities. Besides credit
and market risks, damage to an institutions reputation often represents an important driver for
international banks. Domestic players including microfinance institutions may have different
incentives, among others to contribute to local development, but they play an equally important
role. Empirical research since 1990 concluded that banks were not interested in their own
environmental situation or that of their clients. We are witnessing certain changes and growing
awareness in the field of financial sector like; environmental investment funds, loans, green
banking, global banking, rural banking, agri-banking, social banking and ethical banking.

Social Banking
In Social Banking, the focus is on satisfying existing needs in the real economy and the society;
also taking into account their social, cultural, ecological, and economic sustainability. In the
repercussion of the crisis, many people felt that social banking is more caring for the overall
progress of society than traditional and mainstream banking. It is assumed that social banking
may provide important lessons for the banking and financial sector to avoid further crises in the
future
5
.
According to Institute for Social Banking, Social Banking describes the provision of banking
and financial services that consequently pursue, as their main objective, a positive contribution to
the potential of all human beings to develop, today and in the future
5
.
Benedikter (2011) defines Social Banks as banks with a conscience. They focus on investing
in community, providing opportunities for the disadvantaged, and supporting social,


73
environmental, and ethical agendas. Social banks try to invest their money only in endeavors that
promote the greater good of society, instead of those, which generate private profit just for a few.
He has also explained the main difference between mainstream banks and social banks that
mainstream banks are in most cases focused solely on the principle of profit maximization
whereas, social banking implements the triple principle of profit-people-planet. Social banks care
about making a profit, but equally for promoting human and environmental well-being. It is this
triple principle that they follow when they decide to whom to lend money, and for what
purpose
5
.
It means that social banks consider social and economic sustainability when making financial
decisions. Sustainable investments and lending practices are ones that produce a better quality
of life for the greatest possible amount of people, and whose effects endure over time and
continue to produce a multiplicity of positive effects long after the initial investment.
Now-a-days, social banks are becoming cultural power as social banking includes the concepts
of humane and humanist in financial activities.
Ethical Banking
The Cooperative Bank (UK) offers its customers home energy rating on purchases of consumer
durables. The purpose is to enable them to better understand how energy efficient a property is
and how to make improvements. Moreover, bank's mortgages include carbon-offset features.
Every year that a customer holds a mortgage, the bank offsets a fifth of the carbon dioxide
emissions arising from a typical household's energy consumption. Following customer
consultation in 2003, offset money were used for reforestation in Uganda, a Bangladesh project
that trains local people to build energy efficient stoves and a Bulgaria project supporting micro-
hydro electricity generation.
Citizens Bank (Canada) allows its customers to choose between a variety of VISA cards that
benefit Oxfam Canada, Amnesty International or their philanthropic Shared Interest program by
donating $0.10 to not-for-profit initiatives worldwide every time their VISA card is used. This
enabled Citizens Bank to donate thousands of dollars to Doctors. These are only a few of the
wide range of services available at different ethical banks
5
.


74

Agri-Banking
Alston (2004) argued that international and national events like globalization, international
policy manipulations such as the US farm bill, and national policy, are having a major impact on
agricultural production in Australia. It is more likely that these issues are acting to continue and
exacerbate a trend towards reduced viability for farm families evident in economic and social
trends since at least the 1950s. It was further argued that social aspects of agricultural production
in Australia noting social trends and drawing attention to the changing social relations of
agriculture. It was concluded that there is dominance of farm families, the role of corporate
agriculture, ethnic diversity, the importance of women, and the practice of farm transfers.
Punjab National Banks (PNB) Corporate Social Responsibility Report (2010) shows that
agriculture and farmers related initiatives are taken by PNB increased lending to agriculture,
weaker sectors and women; which results in impacting their lives through income generation.
Moreover, the report shows that the Bank has established two trusts viz., PNB Farmers Welfare
Trust and PNB Centenary Rural Development Trust. These trusts are involved in running
training centers which imparts training in farming and also other non-farm activities. PNB
Farmers Welfare Trust was established in the year 2000 for welfare of the farmers, women and
youth in rural areas. Under the aegis of the Trust, 8 Farmers Training Centres (FTCs) have been
made operational at villages. Apart from this Mobile Van is being used at FTC Sacha Khera for
providing off-site training on improved package & practices of agricultural crops & allied
activities, soil testing and Jatropha cultivation. In addition, the van is acting as an information
kiosk
5
.
Rural Banking
Ramachandran and Swaminathan (2002) examined the effect of financial sector reform on rural
banking and rural credit transactions in India. They reviewed the trends in selected indicators of
rural banking at the national level over the last 30 years. Moreover, they used longitudinal data
for a village in Tamil Nadu to examine changes in patterns of indebtedness and credit
transactions among landless labour households. They concluded that the exploitation of landless


75
labour households in the credit market has intensified with the introduction of financial reforms
and lastly, the policy was envisaged as an alternative to the formal credit sector in the
countryside.
Burgess and Pande (2005) evaluated the impact of a large state-led bank branch expansion
program in India on rural poverty between 1977 and 1990. They used deviations and regression
analysis and found that branch expansion into rural unbanked locations in India significantly
reduced rural poverty
5
.
Global Banking
Miller, S.R. and Parkhe, A. (2002) conducted empirical test of the liability of foreignness in the
global banking industry, using FitchIBCA Bank Scope data for the period 198996 and their
findings strongly support the liability of foreignness hypothesis. Further, the data showed some
evidence that the X-efficiency of a foreign-owned bank is strongly influenced by the
competitiveness of its home country and the host country in which it operates.
Moreover, it was found that in some environments U.S.-owned banks are more X-efficient than
other foreign-owned banks in some environments, but less X-efficient in others.
Mathur, N.D. (2009) has identified a visible trend that growing integration of economies and the
markets around the world is making global banking a reality.
The use of Internet banking has widened frontiers of Global Banking and it is now possible to
market financial products and services on a global basis. Like other industries, banking has
become more global. Banking stands out, however, in its legal form and reliance on cross border
positions. Banks run special risks in lending abroad. McCauley, McGuire and
Peter (2010) have shown that some banking systems are international in their organization while
others are multinational, and that the multinational model can be operated with a greater or lesser
degree of centralization. While much work remains to be done in assessing the performance of
various banking models during the crisis, it does appear that local assets proved more stable
under stress. Cross-border claims and liabilities proved less stable. These findings hold even if
account is taken of the series break represented by US securities firms becoming reporting banks,


76
exchange rate changes and distortions from mergers and acquisitions, some of which resulted
from the crisis itself
5
.

Other Issues:
Banks, usually take help of various Information Technology (IT) based channels to provide their
banking and other services. For this purpose, they are in need to provide continuous and frequent
information about their services. We can use IT as a strong means to fulfill our objectives social
and ethical banking. The IT based banking services are as follows:
Mobile Banking is a new and emerging concept. Large numbers of people are still not aware
about usage of mobile banking. In this, one's mobile phone is used to conduct banking
transactions. The popularity of Online Banking is significantly increasing day by day. It is a term
used for performing various transactions, payments, and account statements etc. with the help of
Internet. Relationship Managers, mostly for private banking or business banking, often visit
customers at their homes or businesses.
Video banking is a term used for performing banking transactions or professional banking
consultations via a remote video and audio connection. Video banking can be performed via
purpose built banking transaction machines (similar to an Automated teller machine), or via a
Video conference enabled bank branch clarification
5
.

Green Banking
There are some major concerns about environmental issues. Therefore, organization need to pay
attention to their outputs whether they are violating environmental issues or not. At Triodos
Bank, it is believed that profit should not be earned at the expense of the world's most pressing
environmental problems. That is why they finance organizations from organic food and farming
businesses and pioneering renewable energy enterprises, to recycling companies and nature
conservation projects. Citizens Bank of Canada has lowered its interest rate on loans for carbon


77
emission cars. These kinds of efforts will surely motivate other banks to promote green banking
and consequently in long run environmental issues can be resolved
5
.



78
4.4.1 FLOW CHART OF CONCEPTUAL DERIVATION OF GREEN BANKING:

















4. 3 GREEN BANKING: A NEW ECO-FRIENDLY CONCEPT IN BANKING ARENA:
Green banking is a component of the global initiative by a group of stakeholders to save
environment where, sustainable development has emerged as a new paradigm of development in
response to the current discourse of development that over-exploits natural environment for
economic prosperity. The sustainable development can best be achieved by allowing markets to
work within an appropriate framework of cost efficient regulations and economic instruments.
One of the major economic agents influencing overall industrial activity and economic growth is
the financial institutions such as banking sector. The banking sector influences the economic
growth and development in terms of both quality and quantity, there by changing the nature of
economic growth. Banking sector is one of the major sources of financing investment for
Agri Banking
Rural Banking
Global Banking
Social Banking Ethical Banking
Other Issues
Green Banking


79
commercial projects which is one of the most important economic activities for economic
growth. Therefore, banking sector can play a crucial role in promoting environmentally
sustainable and socially responsible investment (SRI). Banks may not be the polluters
themselves but they will probably have a banking relationship with some companies/investment
projects that are polluters or could be in future. Banking sector is generally considered as
environmental friendly in terms of emissions and pollutions. Internal environmental impact of
the banking sector such as use of energy, paper and water are relatively low and clean.
Environmental impact of banks is not physically related to their banking activities but with the
customers activities. Therefore, environmental impact of banks external activity is huge
though difficult to estimate. Moreover, environment management in the banking business is like
risk management. It increases the enterprise value and lowers loss ratio as higher quality loan
portfolio results in higher earnings. Thus, encouraging environmentally responsible investments
and prudent lending should be one of the responsibilities of the banking sector. Further, those
industries which have already become green and those, which are making serious attempts to
grow green, should be accorded priority to lending by the banks. This method of finance can be
called as Green Banking, an effort by the banks to make the industries grow green and in the
process restore the natural environment. This concept of Green Banking will be mutually
beneficial to the banks, industries and the economy. Not only Green Banking will ensure the
greening of the industries but it will also facilitate in improving the asset quality of the banks in
future. Internationally, there is a growing concern about the role of banking and institutional
investors for environmentally responsible/socially responsible investment projects. Banking and
other financial institutions are more effective towards achieving this goal for the kind of
intermediary role they play in any economy and for their potential reach to the number of
investors. Environment is no longer the exclusive concern of the government and the direct
polluters, but also the other partners and stake- holders in the business like financial institutions
such as banking institutions can play a very important role in fostering linkage between
economic development and environmental protection. To substantiate, quality of service, the
implementation of environmental conservation measures, support to the deprived section of the
society, concern about the quality of life and nature are the basic principles that the financial
institutions are relying on in their business strategy in recent years. The banking operation targets
a certain long-term rate of return on their credit and investment. Therefore, it is of importance to


80
the banking sector to follow certain environmental evaluation of the projects before financing.
There are studies showing positive correlation between environmental performance and financial
performance (Hamilton, 1995; Hart, 1995; Blacconiere and Pattern,1993). Thus, it is imperative
for the financial institutions in the present context to consider environmental performance in
deciding whether to invest in companies or advise clients to do so. The formation of different
rules for environmental management like resource conservation, clean water act, clean air act,
toxic substance control act are also viewed as potentially significant contributor to the recent
increase in environmental liability for banking institutions. Adoption of these principles will
offer significant benefits to financial institutions, to consumers and also the stakeholders. There
have been attempts to adopt sustainable development strategies from various quarters at
international level. Multilateral agencies, international consortiums, multilateral financial and
development institutions have been advocating for environmental standards and strategies to
evaluate investment projects. In the recent years, the international organization for
standardization (ISO) has issued series of comprehensive guidelines for incorporating
environmental protection and pollution prevention objectives into industrial activity worldwide,
known collectively as ISO 14000
7
. It would certainly give the much needed impetus for the
banking industry to expand the use of environmental information in their credit extension and
investment decisions. In this backdrop, the paper aims to discuss the issues of sustainability in
Banking and how banks can play a role for sustainable growth and development, particularly in
the Bangladesh context.
The state of environment in Bangladesh is rapidly deteriorating. The key areas of environmental
degradation cover air pollution, water pollution and scarcity, encroachment of rivers, improper
disposal of industrial medical and house-hold waste, deforestation, and loss of open space and
loss of biodiversity. In addition, Bangladesh is one of the most climate change vulnerable
countries. In line with global development and response to the environmental degradation,
financial sector in Bangladesh should play important roles as one of the key stake holders. In
response to the above, urgent measures are required by stake holders for sustainable development
and thereby save the planet. Banks hold a unique position in an economic system that can affect
production, business and other economic activities through their financing activities and thus
may contribute to pollute environment. Moreover, energy and water efficiency and waste
reduction are of high concern for many big banks. Green banks or environmentally responsible


81
banks do not only improve their own standards but also affect socially responsible behavior of
other business.

4.4.2 GREEN BANKING & SUSTAINABLE GROWTH
Sustainable development meets the need of present generation without compromising the ability
of future generation to meet their own needs. The key to sustainable development is to ensure
broad-based inclusive economic growth, with:
Promotion of natural resources;
Preservation of regenerating capacity of ecological system;
Avoidance of environmental risks on future generations.
Banking sector can play an intermediary role between economic development and environmental
protection.

4.4.3 GREEN BANKING & ERM INTERRELATIONSHIP

Green Banking & Environmental Risk Management (ERM) move together to care for:

Environmental problems
Poverty & environment
High consumption patterns
Health and environment
Moral obligation
4.4.4 IDEAL BENEFITS OF GREEN BANKING
Basically Ethical (Green) banking avoids as much paper work as possible and rely on
online/electronic transactions for processing so that you get green credit cards and green
mortgages. Less paperwork means less cutting of trees.


82
Creating awareness to business people about environmental and social responsibility
enabling them to do a environmental friendly business practice.
Green (Ethical) banks adopt and implement environmental standards for lending, which
is really a proactive idea that would enable eco-friendly business practices which would
benefit our future generations.
When you are awarded with a loan, the interest of that loan is comparatively less with
normal banks because ethical banks give more importance to environmental friendly
factors - ecological gains. Natural resources conservation is also one of the underlying
principles in a green bank while assessing capital/operating loans to extracting/industrial
business sector.



83















5 : THE INITIATIVES FOR PROMOTING GREEN
BANKING



84
5.1 ETHICAL INITIATIVES AND COMMUNITY INVOLVEMENT:
Numerous banks (as well as some conventional banks) create initiates that allow the banker to
contribute to organizations that have positive societal environmental impacts either in the local
community or in developing countries. For example the Cooperative Bank (UK) offers
customers "a free Home Energy Rating on all house purchases, enabling them to better
understand how energy efficient a property is and how to make improvements. Additionally, all
of the bank's mortgages include carbon-offset features. Every year that a customer holds a
mortgage the bank offsets a fifth of the carbon dioxide emissions arising from a typical
households energy consumption following customer consultation 2003 offset monies were
used for reforestation in Uganda, a Bangladesh project which trains local people to build
energy efficient stoves and a Bulgaria project supporting micro-hydro electricity generation.
Whereas the Citizens Bank (Canada) allows its customers to choose between a variety of VISA
cards that benefit Oxfam Canada Amnesty International or their philanthropic Shared
interest program by donating $0.10 to non-for-profit initiatives worldwide every time their
VISA card is used. This enabled Citizens Bank to donate $24,800 to Doctors without Borders/
Medicines Sans Frontiers in 2007. These are only a few of the wide range of services available at
different ethical banks. Many also have lower interest loans for low emission cars (ex. of low
emission car initiative put forth by citizens Bank). Ethical banks excel in community
involvement, as do other financial instructions such as credit unions. Community involvement is
not limited to ethical banks as conventional banks also partake in such actions. The following
are a few examples of community involvement done by ethical banks, credit unions, and
conventional banks
4,5,ii,iii
.
Affordable housing projects (ex. Van city & Citizens bank)
Many banks/credit unions try to increase financial literacy and consciousness for
environment in the community
Financially support community events (for ex. each year TD Canada trust donates to a
local cause).The role of Green banking in Environmental Management.
The world has seen much focus on economic progress and mankind has made giant steps in its
journey through time. The side effects of the development process have however, also been


85
equally enormous-loss of biodiversity' climatic change' environmental damage, etc. Social issues
such as, poverty alleviation have also become more important as the world has progressed
economically Banks play an important role in development of an economy. The economic
reforms totally have changed the banking sector. The banking sector forming a portion of the
financial sector primarily works as a financial intermediary generating money supply. The banks
should go green and play a pro-active role to take environmental and ecological aspects as part
of their lending principle, which would force industries to go for mandated investment for
environmental management' use of appropriate technologies and management systems.
Banks that are serious about sustainable development put principles at the heart of decision-
making' Fundamental issues such as how deals are done and loans are made, in searching
proactively for opportunities and even in establishing and adhering to policy frameworks that
deliberately preclude involvement in certain investments. For example, an investment in a
factory that pollutes heavily (and passes on the costs to the society at large) will generally have a
higher financial rate of return than a factory that invests in expensive pollution control
technology' as a result showing a lower rate of return.
A Green Banking movement such as less paper is good for the environment where Customers
make paper less deposits, withdrawals and remittances. Going green through
I. No paper statements (statements and charges summaries will be delivered electronically
Via Internet Banking)
II. Fewer letters to open (Bank will call or email us for service reasons wherever possible
rather than write to us)
III. No cheque book or paying-in book for our current account.
IV. No paper-based marketing.
The Bank can concentrate on Nature and environment by projects in the field of renewable
energy (wind energy & hydro-electric projects), organic agriculture across the entire value chain
including health food shops and environment technology such as recycling companies and nature
conservation projects. As environmental issues gain greater attention, pressures are being placed


86
on all industries, including financial services, to implement green initiatives. Like Resource
conservation through cash recycling, double-sided statement print-outs electro mobility.
5.2 INTERNATIONAL INITIATIVES FOR GREEN BANKING
The financial sectors glowing adherence to environmental management system is attributed to
the direct and indirect pressures from international and local Non-Governmental
Organizations (NGOs), multilateral agencies and in some cases the market through
consumers. In the early 1990s, the United Nations Environment Program (UNEP) launched what
is now known as the UNEP Finance initiative (UNEPFI). Some 200 financial institutions around
the globe are signatories of this initiative statement to promote sustainable development living
the framework of market mechanisms toward common environmental goals. The objective is to
integrate the environmental and social dimension to the financial performance and risk
associated with it in the financial sector. As the commitment of this UNEPFI statement goes,
sustainable development is regarded basic to the sound business management. It advocates for a
precautionary approach towards environmental management and suggests integrating
environmental considerations into the regular business operations, asset management, and
other business decisions of the banks. IFC's environmental unit was established in 1991 for
reviewing each project for environmental assessment. Similarly, the US Export-Import Bank
regularly reviews while financing exports on the ground whether they are environmentally
sound. It will be noteworthy to mention that Netherland-based ABN-Amro bank has developed
certain Reputational Risk Management (RRM) policies to identify, asses and mange non-
financial present within it business engagements- Similarly, some of the big international
banks like ABN Amro, Deutsche, Standard Chartered, HSBC Bank etc. look at environment
issues discussed under Kyoto Protocol. Going further, the Dutch Government has made a
formal request to barks in achieving sustainable development. The dialogue between banks and
government was established in 1999 to initiate policies for environmental improvements through
the development of new financial products and services. Similarly, Earth (FOE) and the
Rainforest Action Network (RAN) challenged the industry with high-profile campaign that
highlighted cases in which commercial banks were -bankrolling disasters in 2000 in the US. In
2002, a global coalition of NGOs formed a network named Bank Tract to promote sustainable
finance in the commercial sector. This coalition came up with a resolution constituting six


87
principles promoting environmental protection and social justice by banks and this is popularly
known as Collevecchio Declaration. The six principles that this declaration advocated included
commitments to sustainability no-harm responsibility, accountability, transparency and
sustainable market, and governance. More than 200 organizations have endorsed this declaration
and urged the banks to incorporate these commitments into their business operation The
declaration states that -Finance and Commerce has been at the center of a historic detachment
between the world's natural resource base, production and consumption. As we reach the
boundaries of ecological boundaries of the ecological limit upon which all commerce relies,
the financial sector should take its share of responsibility for reversing the effects this
detachment has produced. All these concerns for sustainable finance or green finance have
compelled the banking institutions to devise a common and coherent set of environmental and
social policies and guidelines that can be used to evaluate the projects. A small group of banks
along with IFC carne together to initiate the process of designing the common guidelines in
October 2002 and came up with a guidelines in June 2003 that is known as Equator Principles
with 10 leading commercial banks adopting these voluntary set of principles. This equator
principle was subsequently updated and the new revised sets of principles are hunched in July
2006. The coverage of projects being financed is expanded in this revised set of principles by
lowering the finance threshold from $50 million to $10 million presently 46 financial
institutions from 16 countries with business operation in more than 100 countries have
embraced this equator principle, So this principle has become a common standard of project
finance that imported environmental and social issues in project finance.
The activities of the equator banks (banks adopting equator principles) are being reviewed by
NGOs worldwide and are being published whenever it is realized that they are not committed to
Equator Principle. IFC along with the Financial Times has initiated Sustainable Banking Award'
since 2006. More than 104 financial institutions out of 151 entries from 51 countries have made
it to the final lists of award 2007. The number of banks applying was up by more than 100
percent compared to the previous years 48 banks from 28 countries. All the international
initiatives towards integrating environmental concerns into business operation of banks are
voluntary in nature and are meant to a common good of a better ecosystem Voluntary
commitment has its own shortcoming in a competitive market. Unless the market for green
money will increase, the lenders will always have an incentive to increase their social


88
commitment and prioritize the commercial interest in the short run. So demand for green money
is a precondition of green banking if it will be voluntary. A Government legislation that makes
banks accountable for the misdeeds of their clients will help promotes green banking
1,2,3,4,5
.
5.2.1 GLOBAL INITIATIVES: DURBAN CLIMATE CONFERENCE 2011
Governments agreed to adopt a universal legal agreement on climate change by 2015.
Key Decisions
7
:

Green Climate Fund to be made available to developing countries by 2012.
Adaptive capacities of the poorest and most vulnerable countries to be strengthened.
Technology Mechanism to become fully operational by 2012.
Web-based registration of developing country mitigation actions seeking financial
support.

5.3 DOMESTIC INITIATIVES FOR GREEN BANKING
Though be late, Bangladesh is now aware that global warming is an issue that calls for a global
response. The rapid change in climate will be too great to allow many eco-systems to suitably
adapt, since the change have direct impact on biodiversity, agriculture, forestry, dry land,
water resources and human health. Due to unusual weather pattern, rising greenhouse gas,
declining air quality etc. society demands that business also take responsibility in safeguarding
the planet. Green finance as a part of Green Banking makes great contribution to the transition to
resource-efficient and low carbon industries i.e. green industry and green economy in general.
Green banking is a component of the global initiative by a group of stakeholders to save
environment. The state of environment in Bangladesh is rapidly deteriorating. The key areas of
environmental degradation cover air pollution, water pollution and scarcity, encroachment of
rivers, improper disposal of industrial medical and house-hold waste, deforestation and loss
of open spaces and loss of biodiversity. In addition, Bangladesh is one of the most climate
change vulnerable countries. In line with global & development and response to the
environmental degradation, financial sector in Bangladesh can play important roles as one of the


89
key stake holders. In response to the above, urgent measures are required by stakeholders for
sustainable development and thereby save the planet. Banks hold a unique position in an
economic system that can affect production, business and other economic activities though their
financing activities and thus may contribute to protect environment. Moreover, energy and water
efficiency and waste reduction are of high concern for many big banks- Green banks or
environmentally responsible banks do not only improve their own standards but also affect
socially responsible behavior of other business.
5.3.1 BANGLADESH BANKS EARLIER INITIATIVES:
BB is well aware of the environmental degradation situation as mentioned above and has already
given time to time directions to all scheduled banks. Commercial Banks are now required to
ensure necessary measures to protect environmental pollution while financing a new project
or providing working capital to the existing enterprises. Banks have been advised to facilitate
their clients with utmost care in opening Letter of credit (L/C) for installation of Effluent
Treatment Plant (ETP) in the industrial units. Banks have been advised to finance in Solar
Energy, Bio-gas, ETP and Hybrid Hoffman Kiln (HHK) in brick field under refinance
program of BB. A comprehensive guideline on Corporate Social Responsibility (CSR) has been
issued where banks have been asked to concentrate hard on linking CSR at their highest
corporate level for ingraining environmentally and socially responsible practices and engaging
with borrowers in scrutiny of the environmental and social impacts. Banks have been brought
under the purview of E-commerce with a view to providing the customers with online-banking
facilities covering pa5rments of utility bills, money transfer and transactions in local currency
through internet as well. Considering the adverse effects of Climate Change, banks have been
advised to be cautious about the adverse impact of natural calamities and encourage the
farmers to cultivate salinity resistant crops in the salty areas' water resistant crops in the water
locked and flood prone areas, drought resistant crops in the drought prone areas, using surface
water instead of underground water for irrigation and also using organic fertilizer,
insecticides by natural means instead of using chemical fertilizer and pesticides
vi,vii,iv
.



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5.3.2 COMMERCIAL BANKS ATTENTION TO GREEN BANKING:
Bangladesh Bank governor urged the chief executive officers of the countrys banks to pay
attention to green banking, by investing in energy efficiency and renewable energy projects.
Central bank has a fund named -Renewable Energy Fund. Only two banks have so far taken the
opportunities offered by the fund. The central bank governor made the request at the launching
ceremony of the Environmental Risk management Guidelines. BB urged the banks and financial
institutions to keep climate change and environmental considerations as priorities in their
activities. The Impact of a deteriorating climate on financial institutions and business enterprise
have driven the creation of the Environmental Risk Management Guidelines, encouraging banks
and FIs to adopt risk management practices to safe guard against these inevitable
environmental concerns. Detailed guidelines on green banking were Issued on February 27,2011
in which banks have been advised to give more emphasis to help environment by eliminating
paper uses saving gas and carbon emissions, and reducing printing costs and postage
expenses. Banks shall comply with the instructions stipulated in the detailed guidelines on
Environmental Risk Management in consideration of a part of the Green Banking Policy. The
comprehensive guidelines were developed by Bangladesh Bank in collaboration with IFC and
with input from Bankers Association of Bangladesh and financial sector stakeholders and have
been issued to all financial institutions in the country
vi,vii,xvii,xviii
.









91












6 : THE MAJOR AREAS AND PRODUCTS OF
GREEN BANKING:



92
6.1 THE MAJOR AREAS OF GREEN BANKING:
Green banking can benefit the environment either by reducing the carbon footprint of consumers
or banks. Either a bank or a consumer can conserve paper and benefit the environment. Ideally, a
green banking initiative will involve both. Online banking is an example of this. When a banks
customers go online, the environmental benefits work both ways. Other examples of what Green
Bank Report considers forms of green banking on the consumer side include
4,5,6,7
:
I. Green Deposits: Banks can offer higher rates on CDs, money market accounts,
checking accounts and savings account if
customers opt to conduct their banking
activities online.
II. Green Checking - converting checking
accounts to online banking
III. Green Money Market Accounts -
converting savings accounts to online
banking
IV. Green CDs bonus rates for online banking
V. Green Loans better rates for energy-efficiency projects, anyone undertaking an
energy-saving house project, should shop around for a bank that offers a special rate
for a green mortgage or loan.
VI. Green Mortgages better rates for energy-efficient houses, A bank can offer green
mortgage with better rates or terms for energy efficient houses. Some green mortgages
allow home buyers to add as much as an additional percent of the price of their house
into loans for upgrades including energy-efficient windows, solar panels, geo-thermal
heating or water heaters. The savings in monthly energy bills can offset the higher
monthly mortgage payments and save money in the long run. The Energy Efficient
Mortgage (EEM) is a type of HUD-approved green mortgage that will credit you for
your homes energy efficiency in the mortgage itself. Many home improvements also
qualify for the energy tax credit.
VII. Green Credit Cards: A green credit card allows cardholders to earn rewards or points
which can be redeemed for contributions to eco-friendly charitable organizations.


93
These cards offer an excellent incentive for consumers to use their green card for their
expensive purchases. Imagine the millions of dollars that could be raised for
worthwhile environmental groups if green credit cards really took off.
VIII. Green Reward Checking Accounts: A bank product called a reward checking
account pays a bonus rate for customers who go green. Customers can earn higher
checking account rates if they meet monthly requirements that might include receiving
electronic statements, paying bills online or using a debit or check card. With this
banking product higher rates and eco-friendly living goes hand-in-hand.
IX. Online Bill Payment: A system allowing individuals to perform banking activities at
home, via the internet. Some online banks are traditional banks which also offer online
banking, while others are online only and have no physical presence. Online banking
through traditional banks enable customers to perform all routine transactions, such as
account transfers, balance inquiries, bill payments, and stop-payment requests, and
some even offer online loan and credit card applications.
X. Sustainable banking: Sustainable Banking is using money with conscious thought
about its environmental, cultural and social impacts, and with the support of savers
and investors who want to make a difference, by meeting present day needs without
compromising those of future generations.
XI. Ethical banking: An ethical bank, also known as a social, alternative, civic, or
sustainable bank, is a bank concerned with the social and environmental impacts of its
investments and loans
XII. Green saving account: The Green Savings Account is a traditional savings account
which offers an attractive interest rate, even if your savings stay put for less than a
year. Your money is always and everywhere accessible.
XIII. Green checking account: The high-yielding checking account that will pay you very
high rates if you convert to online banking and use your debit card regularly. These
deals can make a lot of sense if you carry a decent balance and can meet the monthly
requirements.
XIV. Online Banking: The performance of banking activities via the Internet. Online
banking is also known as "Internet banking" or "Web banking." A good online bank
will offer customers just about every service traditionally available through a local


94
branch, including accepting deposits (which is done online or through the mail),
paying interest on savings and providing an online bill payment system.
XV. Remote Deposit: Remote deposit capture is when a company uses a special check
scanner and scanning software to create an electronic image of each check that it
wishes to deposit. The company then transmits the scanned check information to its
bank instead of making a physical deposit. The bank accepts the electronic
information, posts funds to the company's
account, and assigns funds availability based
on a predetermined schedule.
XVI. Green Investment: The objective for the
establishment of the Green Investment Bank
is to fund renewable energy and low-carbon
innovation projects. This is done through the
construction of wind turbine farms, smart
grids and other such renewable energy
projects to raise equity for green investing.
XVII. Mobile Banking and Mobile Payments: In many parts of the world, mobile banking
provides a solution to the problem of bringing financial services to the rural poor.
Countries like India, China and Bangladesh have put more resources into developing
mobile infrastructure than improving landlines. The environmental benefit of a push
towards more mobile banking is enormous, but there is also a societal benefit. Mobile
banking is proving to be one answer in the fight against poverty.




95
6.2 GREEN BANKING STRATEGIES:
Indian Banks can adopt green banking as a business model for sustainable banking by launching
some of the following strategies
4,5,6,7
:
I. Carbon credit business: Under the Kyoto protocol, clean development Mechanism
(CDM) provides for co-operation between annexure 1 and non-annexure-1 (developing)
countries. The operational mechanism of CDMs involves an investment by a legal entity
from an annexure-1 country into a project in non-annexure-1 country, which results in
emission reduction. These emission reductions have to be certified by an appropriate
authority and these certified Emission Reductions (CERs) which are commonly known as
carbon credits can be used to meet the commitments of annexure-1 countries under the
Kyoto protocol. These carbon credits are traded in the markets. CDM projects are those
projects that contribute to credible and sustained reduction in GHG emissions. Indian
banks can involve themselves in carbon credit business, wherein they can provide all the
services in the area of CDMs and carbon credits including services of identification and
funding of CDM projects, advisory services for registration of CDM projects and
commercialization of CERs under different structures to meet the requirements of its
customers, acting as an intermediary for buying CERs on behalf of end-users or carbon
funds, financing against CERs and CERs receivables, and other related banking services.
As India has huge potential for carbon credit business, Indian banks can set up dedicated
carbon credit cells to capture a major share of this carbon credit business.

II. Green Banking Financial Products: Indian banks should develop innovative green
banking financial products which can directly or indirectly help in the reduction of
carbon emissions. These banks can introduce a Green Fund to provide climate
conscious customers the option of investing in environmental friendly projects. Banks
can also introduce green bank loans with financial concessions for environmental friendly
products and projects. Besides introducing specific green banking products, banks can
incorporate an Environmental Impact Assessment ( EIA) in their project appraisal while
financing any project to measure the nature and magnitude of environmental impact as
well as suggest environmental risk mitigation measures. Banks can also conduct


96
environmental audits of the financed projects. Banks need to redesign their credit
products to assist SMEs to adopt quality and conform to environmental standards. Banks
should also include green guidelines in their credit policies to raise the green loan
portfolio.

III. Green Mortgages: Banks such as Citigroup Inc., Bank of America, and JP Morgan
Chase &Company are just a few of the mortgage lenders offering special discounts on
mortgages used to build or update buildings and homes to be more green. One of the
reasons for the push for green mortgages is that green building and rebuilding tends to
incorporate more energy-efficient materials and building plans.There are two types of
green mortgages: the Energy Improvement Mortgage its like a second mortgage that is
to be used to upgrade a home or building to energy efficient by installing energy saving
items such as solar panels and improved insulation - and the Energy Efficient Mortgages
for the construction of new energy efficient homes and buildings. There are many states
getting in on the green mortgage by offering subsidized green mortgages so that more
home-owners and business owners can green-up their buildings. In addition to helping
save the environment by using less energy, these mortgages offer many advantages to
consumers by reducing monies spent on high utility bills and on high costs of obtaining a
mortgage. The Residential Energy Services Network reported on a recent study showing
that the market value of a home increases $20 for every $1 decrease in energy costs.
IV. Carbon Footprint Reduction: Carbon foot-print is a measure of the impact of our
activities on the environment. It relates to the amount of GHG we are producing in day-
to-day business while burning fossil fuels for electricity, heating, transportation, etc.
Banks can reduce their carbon footprints by adopting the following measures:
V. Paper-less Banking: As banks have computerized their branches, there is ample scope
for doing paperless or less-paper banking. Mostly PSBs use huge quantities of paper for
office correspondence, audit reporting, recording public transactions, etc. These banks
can switch over to electronic correspondence and reporting. Banks should encourage their
customers also to switch over to electronic transactions and popularize e-statements.
VI. Energy Consciousness: Developing energy- consciousness, adopting effective office
time management and automation solutions and using compact fluorescent lighting (CFL)


97
can help banks save energy consumption considerably. Banks can conduct energy audits
in all their offices for effective energy management. They can also switch over to
renewable energy (solar, wind, etc.) to manage their offices and ATMs.
VII. Green Buildings: The Indian banking industry uses more than one lakh premises for
their offices and residential houses throughout the country. These banks should develop
and use green buildings for their office and employee accommodation. These measures
will not only help banks reduce their carbon footprint but also save the operational costs
considerably.
VIII. Social Responsibility Services: As part of the green banking strategies, Indian banks can
initiate various social responsibility services such as tree plantation camps, maintenance
of parks, pollution check-up camps, etc.

6.3 GREEN BANKING TO MITIGATE RISKS
Until recently, environmental concerns were not considered relevant to the business operation of
banks and financial institutions. Traditionally, banking sectors concern for environmentally
degrading activities of clients is like interfering or meddling in their business affairs. However,
now it is being perceived that dealing with environment brings risks to their business. Although
the banking and financial institutions are not directly affected by the environmental degradation,
there are indirect costs to banks. Due to strict environmental disciplines imposed by the
competent although across the countries, the industries would have to follow certain standards to
run their business. In the case of failure, it would lead to closure of the industrys leading to a
likelihood of default to the bank. For example the enactment of Comprehensive Environmental
Response, Compensation and Liability Act in 1980 (CERCLA) in the US in late 1980s has
resulted in huge loss to the banks in the US as banks held directly responsible for the
environmental pollution of their clients and made to pay the remediation cost. This is the
reason for which banks in the US are ahead of other countries in integrating environmental
concerns into their business operations. In the recent years several other countries (more in
Europe) are seen adopting policies that have made banks responsible for the misdeeds of their
clients. Therefore, the financial institutions need to engage proactively with the stakeholders on
environmental and social policy issues and evaluate the impacts of their clients investment. In


98
turn, that would force the customers to take care of their management of environmental and
social policy issues relating to investment. This should cover all project financing activities
across all industries. The importance of Green Banking is immense for both the banks and
economy by avoiding the following risks involved in banking sector.
I. Credit Risk - It can arise indirectly where banks are lending to customers whose
businesses are adversely affected by the cost of cleaning up pollution or due to changes in
environmental regulations. The cost of meeting new requirements on emission levels may
be sufficient to put some companies out of business. Credit risks may 59 higher due to
the probability of customer default as a result of uncalculated expenses for capital
investment in production facilities, loss of market share and third party liability claim.
Credit risks are also associated with lending on the security of real estate whose value has
diminished owing to environmental problems (additional loss in the event of default).
Further, risk of loan default by debtors due to environmental liabilities because of fines
and legal liabilities and due to reduced priority of repayment under bankruptcy.
II. Legal Risk - It can occur in different forms. Most obviously, banks like other companies
are at risk if they themselves do not comply with relevant environmental legislation more
specifically, they are at risk of direct lender liability for cleanup costs or claims for
damages if they have actually taken possession of contaminated or pollution causing
assets. An environmental management system helps a bank to reduce risks and costs,
enhance its image and take advantage of revenue opportunities.
III. Reputation Risk - In all likelihood, due to growing awareness about environment safety,
banking institutions are more prone to lose their reputations if they are involved in big
projects, which are viewed as socially and environmentally damaging. There are also
few cases where environmental management system has resulted in cost savings, increase
in bond value etc. (Heim, G et al, 2005).In few cases the environmental management
system resulted in lower risk, greater environmental Stewardship and increase in
operating profit. Reputation risks are involved in the financing of ecologically and
ethically questionable projects. The adoption of green banking strategies will help the
bank to deal with these risks involved in their business operation. Green banking


99
strategies involves two components (1) managing environment risk and (2) identifying
opportunities for innovative environmentally oriented financial products (IFC, 2007).
IV. Environmental Risk: To manage environmental risk, the banks have to design proper
environmental management systems to evaluate the risks involved in the investment
projects. The risks can be internalized by introducing differential interest rates and other
techniques, Moreover; bank can withdraw itself from financing high-risk projects. The
second component of green banking entails creating financial products and services that
support commercial development with environmental benefits. These includes
investment in renewable energy projects, biodiversity conservation, energy efficiency,
investment in cleaner production process and technologies, bonds and mutual funds
meant for environmental investments etc.
6.4 GREEN BANKING PRODUCTS:
Until a few years ago, most traditional banks did not practice green banking or actively seek
investment opportunities in environmentally-friendly sectors or businesses. Only recently have
these strategies become more prevalent, not only among smaller alternative and cooperative
banks, but also among diversified financial service providers, asset management firms and
insurance companies. Although these companies may differ with regard to their stated
motivations for increasing green products and services (e.g. to enhance long-term growth
prospects, or sustainability principles on which a firm is based), the growth, variation and
innovation behind such developments indicate that we are in the midst of a promising drive
towards integrating green financial products into mainstream banking.

This product and service review is divided into the following banking sectors
4,5,6,7
:
Retail Banking
Corporate & Investment Banking
Asset Management
Insurance
Retail Banking



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6.4.1 RETAIL BANKING
I. Green Mortgages: In general, green mortgages, or energy efficient mortgages (EEMs),
provide retail customers with considerably lower interest rates than market rates for
clients who purchase new energy efficient homes and/or invest in retrofits, energy
efficient appliances or green power. Banks can also choose to provide green mortgages
by covering the cost of switching a house from conventional to green power, as well as
include this consumer benefit when marketing the product. These retail products come in
different designs, some of which have met more success than others.
II. Green Home Equity Loans: Reduced rate home equity loans, sometimes referred to as
second mortgages, can help motivate households to install residential renewable energy
(power or thermal) technologies. In designing and offering these incentive-based
products, a number of banks have also partnered with technology providers and
environmental NGOs.

III. Green Commercial Building Loans: Attractive loan designs and arrangements have
started to emerge for green commercial buildings, characterized by lower energy
consumption (~15-25%), reduced waste and less pollution than traditional buildings.
Some appraisers are now recognizing reduced operating expenses, improved performance
and longer lifetimes associated with these green functions and features. Lower project
costs improve net operating income, a key factor when evaluating property using the
income approach.

IV. Green Car Loans: With below market interest rates, many green car loans encourage the
purchase of cars that demonstrate high fuel efficiency. The number of these products has
increased in recent years, with the majority being offered in Australia and Europe. Most
green car loans are being offered by credit unions, as innovative vehicle lending has
proven to be an ideal niche for smaller financial institutions.

V. Green Cards: A broad family of green products includes debit and credit cards linked to
environmental activities. Most green credit cards offered by large credit card companies


101
offer to make NGO donations equal to approximately one-half percent of every purchase,
balance transfer or cash advance made by the card owner. Annual Percentage Rates
(APR) for affinity cards normally range between 15-22%, and many also charge annual
user fees. Over the past year, tying cards to a GHG offset program has become
increasingly popular among European financial institutions. This supplementary service
can be implemented at little cost to the financial lender, with the potential for sizeable
financial and reputational returns. In recent months, some banks have announced
ambitious green credit card designs
6.4.2 CORPORATE & INVESTMENT BANKING
I. Green Project Finance: A number of banks have created service divisions, or teams,
dedicated to large-scale renewable energy project finance, the majority of leading
European banks had debt portfolios that contained committed lines too entirely, or
partially, finance renewable energy assets. Banks have also started to employ innovative
financing arrangements for large-scale clean fuel and renewable energy projects. Leaders
in this space have achieved reputational benefits through media exposure, public
recognition and corporate responsibility awards.
II. Green Securitization: A variety of innovative environmental securitization techniques
have begun to emerge, including: forest bonds, eco-securitization pilot programs; and
green mortgage-backed securities.
III. Green Venture Capital & Private Equity: We increasingly see consideration paid to
environmental issues when financing companies through the capital market (IPOs and
bond issues). In particular, banks can play a pivotal and profitable - role in assisting
with IPOs for clean technology providers, carbon credit developers and other firms
marketing environmental products and services. Banks can also establish a capital base
for environmental projects through specialized private equity units focused on clean
energy growth markets and investment opportunities.
IV. Green Indices: Some banks have recently developed indices that fluctuate as future
environmental opportunities and challenges emerge. For instance, ABN AMRO has
developed an equity index consisting of firms whose businesses address issues related to
global warming and the environment. This builds on a series of indices, created in 2006,


102
which was based on individual industries, including carbon abatement technologies,
water, solar, ethanol, renewable energy and natural gas. More recently, Merrill Lynch has
developed an energy efficiency index, the only index to focus solely on energy
conservation and demand side management. The new index identifies well-positioned
market segments, with lower levels of energy consumption, and thus smaller carbon
footprints.
V. Carbon Commodities: To date, carbon market products and services have largely been
found in Europe, driven by the January 2005 implementation of the EU Emissions
Trading Scheme (EUETS); a scheme that has put over 12,000 European industrial sites,
including some US subsidiaries, under a carbon constraint. Carbon finance centers on the
provision of equity, loans and/or upfront or upon delivery payments to acquire carbon
credits from Clean Development Mechanism (CDM) and Joint Implementation (JI)
projects. Most banks acquire carbon credits in order to serve their corporate clients
compliance needs, or to supply a tradable product to the banks trading desks. Several
European banks, namely HSBC, Barclays Capital, Fortis, and ABN AMRO, are very
active in this field, employing a range of financing approaches to improve portfolio
diversification, secure opportunities and hedge risks.


6.4.3 ASSET MANAGEMENT
I. Green Fiscal Funds: By purchasing shares in a green fund, or investing money in a
green bank, citizens are exempted from paying capital gains tax and receive a discount on
income tax. Investors can therefore accept a lower interest rate on their investment
II. Green Investment Funds: Sustainable investment funds have evolved through three
generations, where the complexity of assessing investment eligibility rises at each level.
First generation funds solely employ exclusionary social and/or environmental criteria;
second generation funds use positive criteria that concentrate on progressive social and/or
environmental policies and practices; and third generation funds apply both exclusionary
and positive criteria to assess and select potential investments, with a focus on relative
performance within a sector using a best-inclass approach


103
III. Carbon Funds: Collaboration between multilateral development banks and private
financial institutions has led to the emergence of a variety of carbon funds to help finance
GHG emission reduction projects to curb climate change. Acting as a collective
investment scheme, a carbon fund receives money from investors to purchase CO2
emission reduction credits (including, but not limited to, Certified Emission Reduction
credits (CERs) or Emission Reduction Units (ERUs)) from existing emission reduction
projects, or invest in new projects that will generate a stream of CO2 emission reduction
credits. Where government-led carbon funds offer a compliance tool for governments to
meet their Kyoto objectives, private carbon funds offer regulated companies a cost-
effective compliance instrument, and also provide traditional investors with the potential
for cash returns and marketing and CSR opportunities.

6.4.4 INSURANCE
I. Green Insurance: This type of insurance typically encompasses two product areas: 1)
insurance products which differentiate insurance premiums on the basis of
environmentally related characteristics; and
2) Those specifically tailored for clean technology and emission reducing activities.
Examples of green insurance products include green auto insurance, where the premium
is linked to the use and thus environmental footprint of the vehicle, and green home
insurance, where special rates are provided for energy efficient buildings or carbon offset
schemes are offered to help clients achieve carbon neutrality.
II. Carbon Insurance: There are many risks inherent in emission reduction transactions, as
well as low-carbon project assessment and development activities. In response, some
financial institutions now offer insurance products to manage carbon credit price
volatility. For instance, Swiss Re offers a carbon-delivery insurance product based on
Emission Reduction Purchase Agreement contracts, and AIG and Marsh offer coverage
on all traditional and Kyoto-specific risks associated with these riskier environmental
schemes.



104
6.5 PROBABLE KEY OPPORTUNITIES OF THE PRODUCTS:
Given that most green financial products and services have only recently emerged, it is
challenging to gauge, with any level of certainty, their current or potential success. However,
while green financial product and service opportunities will vary across sectors and markets, a
high-level overview of key opportunity areas can be performed.
6.5.1 EMERGING MARKET OPPORTUNITIES FOR GREEN FINANCIAL PRODUCTS:
I. Carbon Market: Carbon commodity products and services are developing at an
extraordinary pace, particularly among European and Japanese banks. In these
regions, setting up emissions trading desks, offering cutting-edge derivative products
based on carbon assets, and investing and buying credits from CDM and JI projects
are all positioned to become mainstream in one or two years. North American
financial institutions that familiarize their stakeholders with the complexities of the
carbon market will likely improve their reputations, while ensuring that future carbon
market opportunities are accurately identified and pursued
4,
.
II. Green Buildings: North Americas green commercial building sector is growing at
an unprecedented rate. By the end of 2006, over 6% of the US non-residential
construction, equivalent to approximately US$15 billion was considered green,
whereas only six years ago this segment was less than 1%. In 2007, it is estimated
that green building development will actually reach a tipping point, where nearly two-
thirds of US builders will opt for green over conventional designs
4
.
III. Clean & Environmental Technology: Over the coming decades, tapping into clean
energy and environmental technology opportunities will continue to require
innovative financing packages, developed through a long-term lens. Along with the
market valuation of the environmental sector, global investment in clean technology
companies expanded rapidly in 2006. By 2010, New Energy Finance predicts that the
growing environmental industry will see approximately US$100 billion in private
equity deals around the world
4
.



105
6.5.2 FIRST MOVER OPPORTUNITY FOR GREEN FINANCIAL PRODUCTS
I. Banks can market the benefits of going carbon neutral, while selling products and
services required for customers to realize this goal. This is especially relevant to the
retail banking and insurance sectors. Stakeholder Alignment Opportunities for Green
Financial Products
II. Financial institutions can become familiar with the entire product value chain by
partnering with contractors and manufacturers to offer green financial products.
III. Financial institutions can align green financial product and service development with
federal, provincial, state, regional, or municipal environmental and energy policies,
targets or incentives.
IV. Financial institutions can collaborate with environmentally-focused non-
governmental organizations and academic groups to design and offer green financial
products through: affinity relationships; supplementary items in product packages;
client workshops; and the design of robust environmental lending criteria.
V. Financial institutions could establish a structured branding approach to green
financial products and services
VI. Financial institutions should attempt to understand and design green and
conventional banking products in the same manner. This is particularly true when
considering key product enhancing features, such as: flexibility, user friendliness,
virtual access, ease of personal management, bundled package options and low-risk.
VII. Financial institutions should identify and address barriers to green financial product
and service uptake. These barriers may include lack of product information and
stakeholder awareness, inflexibility of product design, or uncertainty on costs versus
returns.
VIII. Financial institutions should undertake market research and analyses on the
environmentally related needs and desires of individual customer segments, in order
to ascertain which groups are most likely to consider eco-products as complimentary
to their lifestyles, interests and financial goals.


106
IX. Financial institutions can attempt to overcome perception barriers and stimulate
demand for green products and services through creative, educational marketing
campaigns.






107











7 : GREEN BANKING AND BANGLADESH
BANKING INDUSTRY



108
The climate of Bangladesh has already been exposed to global warming due to
environmental pollution followed by climate degradation although she cant be accused to
be responsible for these issues. However, the climate of the country is rapidly deteriorating due
to recklessness of her citizens and inefficient & ineffective use of natural/semi-
natural/manufactured/processed/ transformed resources. Natural disasters like cyclone, flood,
draught and earthquake become very frequent. As such, state of environment in Bangladesh
needs proper attention and up-gradation for ensuring a better future for our successors.
In response to increasing awareness over climate change, environmental degradation,
urgent measures for sustainable development have been addressed by some of the stake holders
all over the world. Banking system hold a unique position in an economy that can affect
production, business and other economic activities through their procedure for financing
activities which would in turn contribute to protect environment/climate from pollution.
Moreover, efficiency in energy use, water consumption and waste reduction may
significantly contribute for operating cost of many of the large banks of the country.
Projects/Businesses those include waste prevention and resource efficiency systems in a
wide range of sectors including community, commercial and business organizations - such
as shopping centers, regional airports, hospitals, construction, farms, a university, public
organizations, and educational organizations are receiving enhanced attention these days.
The growing financial sector especially banks in Bangladesh can play key role as one of
the important stake-holders of the economy enforcing the businessmen/industrialists of the
country to design their strategy/action plan keeping in mind the vital environmental issues.



109

7.1 BANKS CAN PLAY MAJOR ROLE IN:

Embracing and offering environment friendly online
banking products. e.g. Mobile banking; Online banking

Providing incentives to customers to use green products. g.
Green credit cards, Green savings accounts, Green
checking accounts Incorporating climate change issues into
lending and investment decisions
To promote sustainable environment friendly initiatives undertaking through adoption of
a set of principles and strict adherence to those principles.
To contribute to the national/global interest through avoidance of financing in
specific industry(ies)/project(s)/process(es)/business(es), being harmful or tend to be
causing harm to the environment even if they are financially viable;
To create an atmosphere for the bank and/or its both existing and potential clients to
work within an ideal business environment through innovative marketing of
innovative banking products;
To encourage the employees, the existing and potential clients and other
stakeholders to develop, practice & promote for developing & using Environment
friendly /Green Technology/products/production process
To develop the attitude among the employees to motivate, encourage the
stakeholders through initialization of appropriate in-house environmental risk
management system through introduction of appropriate technology;
To sponsor awareness programs for environment friendly products/technology
through practice of Corporate Social Responsibilities (CSR);



110
7.2 GREEN BANKING POLICY OF BANGLADESH BANK:

The broad objectives of the Banks are using their resources with
responsibility to grow- trade, commerce, service, industry, income,
employment generation, business and other economic activities. A
Bank which is socially responsible, environmentally cognizant and
follows a path of sustainability with automation and efficiency is
called Green Bank
iv
.


SL Nature of The Job Function (descriptions of the job)
1 Sector Specific
Environmental
Policies be
designed
I. Agriculture, Agri-business (Poultry & Dairy), Agro farming
II. Leather (Tannery)
III. Fisheries
IV. Textile and Apparels
V. Renewable Energy
VI. Pulp and Paper
VII. Sugar and distilleries
VIII. Construction and Housing
IX. Engineering and Basic Metal
X. Chemicals (Fertilizers, Pesticides and
XI. Rubber and Plastic Industry
XII. Hospital/Clinic, Chemical Trading
XIII. Brick Manufacturing
XIV. Ship breaking etc.

2 Green Strategic
Planning
Determine green targets
I. To determine a set of achievable targets and strategies.
II. To disclose these in the annual report and web-site for green
financing and in-house management.


111

Target areas for in-house management:
i. To attain energy efficiency in the form of the use of renewable
energy.
ii. To reduce electricity, gas and petrol consumption.
iii. To reduce of Green House Gas (GHG) emissions.
iv. To have environment friendly office building.
v. To issue e-statements, electronic bill pay.
vi. To save papers.

Target areas for green financing:
i. To reduce investments for environmentally harmful activities.
ii. To attain a particular percentage of environmental investment.
iii. To introduce eco-friendly financial products.
3 Setting up Green
Branches
Features of Green Branches:
To use maximum natural light
To use renewable energy
To use energy saving bulbs and other equipments.
To reduce water and electricity use.
To use recycled water.
A green Branch will be entitled to display a special logo
approved by Bangladesh Bank.
4 Improved In-house
Environment
Management
To take Strategy of reuse, recycling of materials & equipments,
and source reduction and waste minimization.
To rely increasingly on virtual meeting through the use of video
conferencing in lieu of physical travel for saving cost and
energy.
5 Formulation of
Bank Specific
Environmental
Risk Management
To develop and follow an environmental risk management
manual or guidelines for the assessment/ monitoring of project
and working capital loans/investments.



112
Plan and
Guidelines.
To set internationally accepted higher environmental standards.
6 Rigorous
Programs to
Educate Clients to be
undertaken.
To encourage/ influence the clients and business houses comply
environmental regulation.
To introduce rigorous program to educate clients.
7 Disclosure and
Reporting of
Green Banking
Activities.
To start publishing independent Green Banking and
Sustainability reports showing past performances, current
activities, and future initiatives.
To disclose update and detail information about Banks
environmental activities and performances of major clients.

7.3 BANGLADESH BANKS GREEN BANKING INITIATIVES:
Bangladesh Bank is the only central bank which has issued an indicative guideline for Green
Banking.

The guidelines for Green Banking and Environmental Risk Management aim to:

Ensure environment friendly business practices by banks and financial institutions of the
country.
Incorporate environmental risks into Core Risk Management (CRM).
Promote sustainable financial and economic growth.




113
BB advised banks to

Facilitate clients to open L/Cs for installation of ETP in industrial units; finance Solar
Energy, Bio-gas and ETP projects;

Comply with CSR guidelines for ingraining environmentally and socially responsible
practices; comply with the instructions stipulated in Green Banking Policy.


Banks have been brought under the purview of E-Commerce covering

Payments of utility bills,
Money transfer and
Transactions in local currency through internet.

BB launched refinance line of Taka 2.0 billion for financing bio-gas, solar power, effluent
treatment plan and Hybrid Hoffman Kiln (HHK) in brick field.

7.3.1 BBS IN-HOUSE INITIATIVES
XVII, XVIII
:

BB installed 8 kilowatt solar power system on its rooftop: a move towards to encouraging
green banking in Bangladesh.

Environmentally harmful incineration of non-re-issuable damaged bank notes is being
phased out, restoring instead of shredding.

Steps for measuring carbon footprint of BBs internal processes and operations are
underway.


114
7.4 BB FORMULATED GREEN BANKING POLICY GUIDELINE IMPLEMENTED
IN 3 PHASES:



115



116
7.5 HOW BANKS WILL BE BENIFITED:
Improved CAMELS rating.
BB will declare the names of the top 10 banks regarding their overall performance in
green banking activities.
BB will actively consider green banking activities of banks while according permission
for opening new branch.
BB will accord permission for SME branch subject to installation of solar panel in place.
Separate treatment in existing guidelines of RBCA for Environmental Risks in
computation of Adequate Capital by BB.

7.6 BANGLADESH BANKS REFINANCE LINE FOR RENEWABLE ENERGY:
BB has introduced Taka 2.0 billion refinance line for financing solar energy, bio-gas and
effluent treatment plant (ETP), at only 5% interest rate.
BB will provide maximum 100% refinancing facility under this scheme.
Banks and non-bank financial institutions have already started to access BBs refinance
line.



117

7.6.1 BBS REFINANCE LINE FOR RENEWABLE ENERGY: DISBURSEMENT PROFILE
As of June 2011, around Tk. 135.0 million has been disbursed under BB refinance line, of which:
Tk. 15.1 million for Solar Irrigation Pumping Station
Tk. 59.3 million for Solar Home System
Tk. 49.4 million for Biogas
Tk. 10.1 for Effluent Treatment Plants
7.6.2 FINANCING OF SOLAR HOME SYSTEM

Bank(s) Amount disbursed
(Tk. million)
No. of Clients
MTB 59.3 2,167
AB Bank 3.5 167
Al Arafah Islami Bank 20.0 350
National + Uttara + Rupali + Jamuna Bank 8.5 402

Besides, IDCOL (a NBFI) has installed around 1.2 million Solar Home System till
October 2011.


118
Solar Irrigation Pumping Station has enabled irrigation in remote, off-grid areas in
Bangladesh.
Mutual Trust Bank (MTBL) has been provided with Taka 3.8 million refinance facility
for a project on solar irrigation pumping station in Borguna.
Besides, MTBL has financed 8 similar projects.
7.6.3 FINANCING OF BIO-GAS PLANTS
3 banks have been facilitated with Taka 51.5 million refinance lines for installation of 173 Bio-
gas plants. Banks involved with financing Bio-gas plants are
xvii,xvii
:

Trust Bank
Mutual Trust Bank
National Bank.

7.6.4 FINANCING IN OTHER PROJECTS
XVII,XVII

Banks have been provided with Taka 10.7 million refinance line for financing Effluent
Treatment Plants
Sonali Bank limited has been provided refinance facility against financing of eco-
friendly Hybrid Hoffman Kiln in Rongpur.




119
7.7 GREEN BANKING ACTIVITIES OF BANKS:
As reported by banks, they are already
practicing:
Use of paper on both sides for internal
consumption
vii,viii,xvi,xvii,xviii
;
E-statement for customers instead of
paper statements;
Maximum use of day light for office
work;
Use of energy efficient bulbs and other
electronic equipments;
Conversion of Banks vehicles (pool) into CNG.

Online Activities:
Intensive use of online banking and internal communication system to provide better & greater
banking services to clients.

7.7.1 TRUST BANK:

Experimentally installed Bio-gas plant to generate rural energy with 13 farm families in
Manikganj.
Declared Sreepur as Bio-gas Palli under rural SME product Trust-Shufola;
Spot disbursement of TK. 21.0 million to 65 farm families/rural clients for Bio-gas &
Fishery projects.

7.7.2 MTBL
MTB Centre based on green energy conscious design.
Solar Panel on rooftop.


120
MTB Green Energy to finance renewable energy projects.
MTB Krishi, a loan product to finance core sectors of agriculture.
Solar system powered branches: Ishwardi Branch, Belkuchi Branch
Barguna Model -a solar driven irrigation system; 7 other solar irrigation projects.
Commercial bio-gas plants for power generation.
Hi-Tech project of 35KW Solar Power Plant in Gazipur.
Solar system at 909 Union Parishad offices in off-grid areas.
7.7.3 : IBBL
Solar Panel on rooftop.
Special attention to :
ensuring maximum recycling/processing of
waste;
environment friendly projects
brick field (Zig-Zag)
CNG Re-fuelling projects
Energy savings bulb projects
organic fertilizer
jute project instead of poly
Tree plantation.
Preference to environmental infrastructure projects like renewable energy, clean water
supply, waste water treatment, bio-gas and bio-fertilizer.
7.7.4 BANK AL-FALAH

Installed first ever solar powered ATM booth in 2011.



121
7.8 2050: VISION FOR BANKING IN BANGLADESH:

According to BBs Green Banking
statement We envision Bangladesh
as a mature advanced economy in
2050, with levels of human
development and technological
advancement sufficient to place her
among leading Asian nations in terms
of financial prosperity as well as social and environmental responsibility.
iv,vi,



122









8 : GREEN BANKING ACTIVITIES OF IBBL:



123
8.1 OVERVIEW OF GREEN BANKING POLICY OF ISLAMI BANK BANGLADESH
LIMITED
Islamic Economic system is a complete system of social and economic justice. It has specific
spiritual Guidelines on property rights, business & commercial activities, the incentive system,
allocation of resources, economic freedom & development etc. Thus Islamic Economic system
is not only an interest free economic system but also a system of total welfare of mankind &
universe. Islamic Banking system is the part & parcel of the Islamic Economic system. Islamic
Banking refers to a banking system that is consistent with the principles of Sharia'h (Islamic
jurisprudence) which emphasizes moral & ethical values in all dealings, carry out halal (allowed
by Islamic Jurisprudence) business and abstain from haram (prohibited by Islamic
Jurisprudence), hazardous, speculative, gambling businesses. Therefore, Islamic Banking system
is an ethical banking system.
Islami Bank Bangladesh Limited was emerged in 1983 as the first private sector Islamic Bank in
Bangladesh to establish ethics in all economic activities with the mission of establishing
Islamic Banking through the introduction of a welfare oriented banking system and also
ensure equity and justice in the field of all economic activities, achieve balanced growth and
equitable development through diversified investments particularly in the priority sectors and
less development areas of the country and encouraging socio-economic uplift and financial
services to low income community particularly in the rural areas.
According to the mission statement, being a sharias based Bank. Islami Bank Limited (IBBL) is
a bank of Islamic Shariah, Ethics, Environmental Cognizance, Economic justice, Green Banking,
All section of people
8
.
8.1.1 GREEN BANKING GOVERNANCE OF IBBL:
IBBL has been operating all of its activities with due consideration of total welfare, ethics,
environmental cognizance, economic justice, shariah rulings etc., since inception. It was looking
forward for a national policy to shape its activities and-to make its welfare efforts a success
because it feels that combined efforts are needed to bring the total welfare and to make the earth
green. After recent circulation of the "Policy Guidelines for Green Banking" vide Bangladesh


124
Bank BRPD Circular No.02 dated2l February, 2011, the Green Banking activities of Islami
Bangladesh got a new embodiment and it has introduced the followings for proper &
effective governance of the Green Banking activities of IBBL
8
:
Establishment of separate Green Banking Department under the Banks
RiskManagement Unit;
The Executive Comrnittee has been assigned to supervise the Green Banking
activities;
Formulation of a broad Green Banking policy for the Bank
Incorporation of Environment Risk Management in the Bank's Investment Risk
Management Guideline
8.1.2 SPECTRUM OF GREEN BANKING ACTIVITIES OF IBBL:
The terms of the Green Banking Policy of Bangladesh Bank (Phase-I), the Green Banking
activities of IBBL has been concentrated in the following region/sectors of its day to day
activities
8
.
Investment Operations
Internal Operations & Environment
CSR activities
Adoption of Green Technology
Product & Market ecology

8.1.2.1 INVESTMENT OPERATIONS:
The investment policy of IBBL has been prepared not only considering the profit goals but also
considering the following ethical aspects
8
:

Islamic Sharia'h
Social Desire
National Investment,
Finance Plan' Perspective plan etc.'


125
Economic Justice
Environment Protection
Green Banking Policy of Bangladesh Bank Protection of haram/socially undesired
goods production
Preference for investment to lower income group
Product invention by market segmentation
Diversification of investment by giving preference to special/least economic zone
Product invention for preferential sector
Bringing non-earning group of people into earning process etc.'
As such, IBBL should extend banking facilities in production or trading of sharia'h approved
goods & services. IBBL should not extend any facilities against any speculative, health
hazardous detrimental products. We should emphasis the investments clients to install water
treatment plants where needed, or effluent treatment plants, or hazardous waste treatment plants
to qualify for investments. We should give high preference to environmental infrastructure
projects like renewable energy plant, clean water supply project, waste-water treatment plant,
Bio-gas plant, bio-.fertilizer plant etc. In addition to environmental infrastructure projects, we
should preference to energy saving and environment friendly product manufacturing projects.
We should also ensure that its investments are made through rigorous evaluations of overall
environmental impact of the project so that no damage done on environment using the
investments. We should give special attention on the following matters at the time of financing
Ensuring maximum recycling/processing of waste/detrimental by-products;
Environment friendly projects
Brick field (Zig-Zag)
CNG Re-fuelling projects
Energy Savings Bulb Projects
Organic Fertilizer
Jute Project instead of Poly
Tree Plantation etc.
Being an ethical bank, we should ensure diversified distribution of the wealth through diversified
and decentralized investment operations and hence in order to reach the banking services to the
poor people of the rural areas. These investment operations create self-employment in the rural


126
areas through its agro based Rural Development Scheme (RDS), Micro-Enterprise Investment
Scheme (MEIS) and in the urban areas through Small Business Investment Scheme (SBIS) and
thus will ensure socio-economic uplift of the deprived people, poverty reduction and
employment generation. We should give emphasis to diversify our investment portfolio by size,
sectors, area, economic purpose etc.

8.1.2.2 INTERNAL OPERATIONS & ENVIRONMENT:
IBBL will try to be as much conservative as possible in use of resources like fuel, electricity,
paper and even water. We should ensure maximum efficiency while using resources. We should
try to avoid printing and print on both sides of a paper when needed. Reusing envelopes, folders,
Papers clips and using e-mail instead of paper correspondences, ceramic cup/glass instead
of disposable ones, CFL bulbs/tubes instead of the normal ones, scrap papers as notepads,
less fuel consuming cars. IBBL should try to use energy saving bulbs, and ensure that there is
sufficient arrangement for using day light and air circulation
8
.
8.1.2.3 ADOPTION OF GREEN TECHNOLOGY:
8.1.2.3.1 TECHNOLOGIES IN INTERNAL OPERATIONS:
IBBL is always pioneer in technology adoption. IBBL has developed an in-house built
integrated banking system namely eIBS (electronic Integrated
Banking System) in between 2001-2004 and implemented the same
covering all of its business aspects like
8
:
Customer information
General Banking
Investment
Foreign Exchange
BASEL-II
Remittance (Foreign & Local)
SWIFT
Internet Banking


127
SMS Banking
Alternative Delivery Channels (Debit Card, Pre-paid Card, Remittance Card, Traveler
Card, Cardless Transaction)
Centralize Foreign Trade Processing System (all types of LC, Bills issue & payment.
SWIFT Message generation & conversion)
Bangladesh Automated Cheque Processing System (BACPS)
Rural Development Scheme (RDS)
Credit Card'
Security
Centralization of foreign trade operations

for its in-house day to day to business management and to ensure better & prompt services
through acquainting the customers with automation & paperless banking system.
8.1.2.3.2 TECHNOLOGIES FOR BETTER CUSTOMER SERVICES:
All of its branches are online. It has introduced SMS & Internet Banking, ATM Services for its
customers. Moreover, it is going to adopt Mobile Banking Service, Point of Sale (POS),
Khidmah (Credit Card), Travelers Card, Automation of all scheduled Telegram, Automation
of all types of statement, implementation of Investment HUB, Document/Content
management, work flow management, data archive etc. to enhance its own efficiency and to
facilitate its customers BL make its customers acquainted with the technology based paperless
Banking system
8
.
8.1.2.3.3 SPECIAL TECHNOLOGIES:
IBBL has its own online Data Center, Disaster
Recovery Site, Distributed BACH system,
Central MIS system developed by itself for its
own. It is using intranet, own mail server for
internal communication instead of paper based
correspondences. Therefore, all the employees
should be acquainted and habituated with the emerging technologies.


128
8.1.2.3.4 INFORMATION TECHNOLOGY:

Today's banking is almost impossible without technological platform. It is assumed that rapid
technological advances over the next several years will reshape banking industry beyond
imagination in terms of product & service standards. Our best efforts are given on automation,
developing the procedure and reducing manual operations. We made substantial development at
our ICT area in 2011. As briefed below:
i) Launched iTransfer and iRecharge services, Mobile Banking, SMS banking etc.
ii) Joined OMNIBUS, a platform of shared ATM and POS (Point of Sales) networks.
iii) Own ATM reached to l00 level mark in 2011.
iv) Became country's largest online network having centre in Banking Sector.


8.1.2.4 CSR ACTIVITIES:
CSR activities of the Bank are concentrated in the following points of view
8
:
Responsibility towards shareholders
Responsibility towards employees
Responsibility towards customers
Responsibility towards community
Responsibility towards environment
Responsibility towards suppliers

IBBL has been following the path of sustainability with efficiency and discharging its
responsibility to safe guard shareholders value by complying sharias & law of the land. The
Bank is always aware of continuous development of knowledge of the employees,
competencies and attitude of the employees; comfortable and modern working environment as
well as justified and competitive compensation packages for it employees.
The Bank is enhancing its customer services and adopting modern but green technologies where
needed. IBBL contributes to a great extent in inclusion of the small untapped deposits and


129
channeling the same in the regular economic activities through opening account the lowest
initial deposit from Tk. 10/- to Tk. 500 considering the categories of products. IBBL also
designed many investment products for the deprived portion of the people and helps them
fulfilling their basic needs. Moreover, IBBL provides Quard (without any profit/interest) for
sanitation establishment of tube-well to ensure supply of pure drinking water. IBBL established
many hospitals to provide health services to the people at the lowest cost, organizes various
health camps, established many institutions (including technical) to ensure better education
for the people at the lowest cost and through Islami Bank Foundation (IBF).
IBBL also arranges scholarship programs, academic award, tree plantation programs, arranges
training/seminars etc. for women empowerment program, mobilizes charitable fund &,
contributes in relief and rehabilitation, takes measures for mitigating environmental risks for its
community and stakeholders. The Fael Khair Agro-Inputs Program (FKAIP) has been operated
in 23 upazllas under 12 districts. About 52,000 Sidr victim families have been brought under the
program and are provided with quard without any service charge or profit.
8.1.2.5 PRODUCT & MARKET ECOLOGY:
IBBL always introduce its product considering the environment affects. Some of the examples
of such products are as under
8
:
Solar Panel Investment Scheme
Agricultural Implements Investment Scheme
Rural Development Investment Scheme
Micro-Enterprise Investment Scheme
Mudarabah Savings Account for Farmers
Mudarabah Savings Account for Students
Women Entrepreneurs' Investment Scheme
Mudarabah Waqf Cash Deposit Account
Small Business Investment Scheme etc.

More emphasis is given on Small & Medium Enterprises instead of large scale industries and
rural areas instead of urban areas to ensure equity, justice, decentralization and balanced growth


130
of the economy while financing. It also gives emphasis in utilization of the hazardous toxics/by
products that are emitted from the industry and conversion of the same into hygienic products
and thus making those projects as the complete ones. IBBL itself always tries to promote its
products & services through counseling or by electronic media like its websites, television, and
radio etc. rather than using paper based media. It also encourages its customers to promote their
products & services in an environment friendly way.
8.1.3 WORKING PARADIGM OF THE ICT DIVISION OF IBBL
IBBL now has its Own, ATM network with access to other renowned ATM Networks for ease
and convenience of its Customers. Remittance Card is already available for beneficiaries of
foreign remittance earners. The Bank very close to introduce its own Islamic credit card
(Khidmah card) & different prepaid cards along with existing AIM (debit) Card' all types of
Electronic Fund Transfer & Alternative Payment Systems i.e. AIM, PoS, SMS Banking,
Internet Banking & mobile Banking are either aiready in service 9r being incorporated into the
Bank's long list
8
.

8.1.4 CARE BANKING SYSTEM OF RBBL-EIBS (ELECTRONIC INTEGRATED BANKING
SYSTEM)

IBBL is the first and only bank in Bangladesh to possess ln-house developed' fully fledged core
banking system eIBS. It is based on open sources technologies and most secure Database
management system ORACLE.

8.1.5 ONLINE BANKING:
IBBL Possesses the largest online banking network In the Country. All branches are under online
connectivity using fiber optics and radio signals with 117 branches having dual connectivity.



131
8.1.6 THE ATM PROJECT AND INTERFACE OF IBBL ATM NETWORK WITH OTHER
ATM NETWORKS

Sincc 2001 IBBL started providing ATM service to its customers from 55 branches through a
consortium of financial organizations using a 3
rd
party ATM service provider. And since
december 2009, thc Bank has been operating its own ATM network. Now more than 175,00,000
of the Bank's existing ATM card holders can use IBBL's own 100 ATMs & 1035 ATMs of other
ATM Networks across the country. On an average nearly 10,000 transactions with withdrawal of
more than Tk. 7 crores are now done per day
8
.






8.1.7 ON-LINE DATA CENTRE (DC) & DISASTER RECOVERY SITE

IBBL has the country's largest Data Centre in the Banking sector running on Sun Solaris l0 &
oracle 10g Enterprise Edition wherein Branch data are uploaded incrementally from all the
branches. This data are used as backup for emergency situations & MIS report preparation for
different Wings/Divisions/Departments of Head Office

8.1.8 INTERNET BANKING (IBANKING) AND SMS BANKING

More than 30,000 clients have registered for the Internet Banking services. Internet banking
helps client to sending and receiving taka and performs all the task of banking. More than 2 lac
clients have been registered in SMS Banking and on average 6,500 requests are being received
per day. There are plans to implement SMS service
Category Quarter Quarter 1 Quarter 2 Quarter 3 Quarter 4
No. of ATM Card 58120 95887 133004 166117
No. of ATM Booth 51 85 88 100
No. of Shared ATM 120 141 170 1035


132
8.1.9 BACH (BANGLADESH AUTOMATED CLEARING HOUSE)

IBBL has developed a system (as per guidelines of Bangladesh Bank) required for BACH
operations. Through its implementation, same clay clearing of instruments is now possible.

8.1.10 BEFTN (BANGLADESH ELECTRONIC FUND TRANSFER NETWORK)

IBBL has been one of the few banks to develop own BEFTN system as per guidelines of
Bangladesh bank. Now, all branches of IBBL are capable of sending and receiving through
BFTN


133
8.2 PHOTOS & FLASHES OF IBBL GREEN BANKING
8
:












Implementation of Mobile Banking as a part of Green Banking Strategy







134


Figure 1: Scholarship Program by IBBL








FIGURE 2 SOLAR PANEL AT THE ROOF
IBBLHEAD OFFICE
FIGURE 3: IN-HOUSE GREEN BANKING OF IBBL


135
Green Banking Policy Implementation at Mozart Knit ltd:



















FIGURE 4: EFFLUENT WATER TREATMENT PLANT AT
MOZART KNIT LTD.


136
Green Banking Policy Implementation at A S M Chemicals Ltd.















FIGURE 5: HYDROGEN PER-OXIDE MANUFACTURED FROM
WASTE CHEMICALS AT A S M CHEMICALS LTD


137
Green Banking Policy Implementation at Sarah Composite Mills Ltd.






Green Banking Policy Implementation at I R Bulb Co. Ltd.







.
FIGURE 6: ENVIRONMENT FRIENDLY JUTE PRODUCTS
MANUFACTURING AT SARAH COMPOSITE MILLS LTD.
FIGURE 7: ENERGY SAVINGS BULB MANUFACTURING
FINANCED BY IBBL


138





Tree Plantation Program by Islami Bank Ltd.





FIGURE 8: ENVIRONMENT-FRIENDLY BRICK
MANUFACTURING AT TAMANNA CERAMICS LTD.
FIGURE 9: TREE PLANTATION PROGRAM BY IBBL


139









9 : IMPLEMENTATION OF GREEN BANKING
POLICY BY ISLAMI BANK AMIN BAZAR



140
9.1 AMIN BAZAR BRANCH AT A GLANCE
IBBL established its Amin Bazar Branch at 29-12-1990. The Branch is banking with various
types of account holders of deposit accounts as well as investment accounts. We have a
mentionable amount of SBIS, HDS, and RDS investment in our branch. Huge number of foreign
deposit accounts is also here.

MSS deposits are also increasing day by day. There are some valued investment clients (such as
M/s. Joynal Abedin & its Sister Concerns, M/s. Sakura Paribahan, M/s Brothers Corporation,
M/s. Shuvro Enterprise, ) who want to get specialized service. On the other hand, the other
Banks situated in this area like Dhaka Bank, Uttara Bank, Sonali Bank etc. are offering various
products, specialized service with advanced technology to attract the clients. In such situation, it
is the time-need for our Branch to provide sufficient manpower, to update digital programs &
other logistics support in order to deliver prompt & up to date banking service, to reduce untold
pressure of voluminous works, to achieve the targeted goal & to survive in the 21
st
century
competition
8
.
Deposit: The trend of deposit mobilization of our Branch for this year is satisfactory. The
total outstanding deposit as on 31.12.2009 is Tk. 713.46 million. Now it has been raised
to 1000.70 million. Whereas our target for the year 2011 was Tk. 1250.00 million. With
our best effort we have achieved 81% of the target. Although the area is not deposit
oriented, we expect that the increasing deposit trend will continue in the coming days
Inshaa Allah.

Investment: We have closed the year 2011 with investment outstanding of Tk. 1685.77
million. It may be mentioned that 66% investment of our branch is under HPSM
(Transport & Real Estate) and monthly due realizable amount is around Tk. 19.00
million. Our investment target for the year 2011 was fixed for Tk. 180.00 crore. We have
achieved 94% of the target.
Shariah Compliance: We have tried our level best to minimize the shariah violation for
the year 2011. We achieved shariah compliance 97% during the year 2011. We hope
this year our Shariah Violation will be Zero percent. It may be said that observation of
Shariah principles in Trading Mode (i.e. Bai-Muajjol, Bai-Murabaha Bil Azal) is so much
tough. Actually buying the goods, retaining the ownership and then selling & delivering


141
the goods to the clients is so much tough, sometimes it is impractical due to latest
development of ICTD. We think that further research to be needed in this regard.
Introduction of Mudaraba & Musharaka Modes: These two modes of investment is
called the most ideal mode of Islamic Banking. Man behind the business is the most
important factor regarding these to modes. We need honest, sincere and experienced
business man for implementing these two modes. We are seeking for induction of such type
of honest, sincere & experienced clients under these two ideal modes of investment.
Overdue investment: We have wholeheartedly tried to trim down the overdue figure to
zero level and for the last three years we are one of the overdue free branch.
Classified Investment: Present Classified investment of our Branch as on 31.12.2011 is nil.
Written-off Investment: We have two written off clients namely (1). M/s. Unique
Builders and (3). M/s. Shuvo Bricks as on 31.12.2011. From the staring of the year we had
taken a master plan for recovery of the amount with the help of local Social leaders as well
as our valued client Md. Hanif Miah with. But due to unfortunate situation of our client Md.
Hanif Miah at the middle of the year the plan could not be shined moreover our trying for
execution of attachment procedure could not be completed. Hoping that we will be able to
recover a lump-sum amount with in this current year.
Improvement of Customer Service: Service is a product of modern civilization. Now a
days modern civilization cannot think without service. It is a most important part of modern
world. We are at present a computerized Branch with on line, ibanking, SMS banking &
ATM facilities. We are developing our customer services with the help of modern
technologies as well as adding three new Cash counters with one stop service. Now the
clients are more satisfied on our service resulting the deposit and investment of our branch
are increasing day by day.
House Keeping: Housekeeping is most important for internal discipline of the Bank. We
have taken many steps for development of our House Keeping. We have decorated the
branch with natural plants, keep the branch neat and clean, and arranged all the books,
Forms, files and documents in file cabinet according to the instruction of the Management
and trying to update all the books & records for smooth functioning and smart looking.
Human Resources Development: We are very much aware for development of Human
Resources of our Branch. We arrange job rotation on regular interval. Subject wise


142
discussion also done beside, Durse ul Quran and Hadith. Computer training also launched
among the officials to provide better service to the customers. Thus we are developing the
professional as well as external knowledge of our officials.

9.2 QUALITATIVE INTERVIEW AND ANSWER:
I took a survey from Employees in Amin Bazar branch, the summery of that survey given
bellow.
1
st
question was Do Islami Bank Amin Bazar Br. Invest on Solar power or Eligible
for renewal power or any alternative power source to save environment?
The entire employees give same answer that they do not have these type
investments yet but Islami Bank Bangladesh Limited has.

2
nd
Question was Does Amin Bazar br. have any investment rate waiver for environment
saving Project?
different employees give different answer. This may cause they not practicing
that much Green Banking function. And another reason that one of employee of
investment department told they do not get any application that can fully satisfy
environment saving project. If they get any of this type application for
investment, they would consider investment rate waiver as per rules of head
branch.

3
rd
question was Do you planning for Door-to-door banking service?
Maximum employee does not have proper idea about that. It is subject of Head
office.

4
th
question was Do you help farmers for stop selling their lands for industrial
purpose?
They do not have this type investment plan but RDS department of Islami
Bank Amin Bazar Branch are totally functioning with rural people as well as
farmer. They are helping rural people or farmer for becoming solvent that they


143
can enjoy minimum standard level of life and this may help them to stop selling
their lands.

5
th
question was Do you have any tree plantation programme?
this time all employee give similar answer that they have this type programme.

6
th
question was Do you provide any training to your partners or buyers for
environment saving activities?

Maximum employee told they do not directly provide any training to them but
they provide guideline and make sure that applicant got certificates from
Department of Environment of Bangladesh ( ).

7
th
Question was Do you reward your partner for keep his/her project more environment
friendly?

the answer is NO Amin bazar branch do not provide any reward for this reason.

8
th
Question was Does this Br. Have any policy about Green banking?

All the employee ensure that The Amin Bazar branch have Green Banking Policy.

9
th
Question was What are those policies-
Maximum employee give similar answer that.

1) Trying to preserve documents in computer or CD other than hard copy.
2) Branch premises should be neat and clean.
3) Organize tree plantation and cleanliness program.

10
th
Question was What are the environment friendly steps taken by Islami Bank Amin
Bazar-


144
Answer is:
1) Wastage is disposed correctly.
2) Training to keep branch premises neat and clean.
3) Energy saving electronic light is using.

11
th
Question was For the location of this branch, You mainly invest on Sands, Rod,
steel, motor parts, cosmetics, Bus, rock. So, how do you ensure green banking in these
sectors?
Answer is:- CNG motors are the part of green banking. Because its emitting
clean natural gas than toxic gas. If they got certificated from Department of
Environment than it means the applicant will not harm environment and Amin
bazar branch also look up that is the applicant using solar power and having
power saving instruments.
12
th
Question was Before investing in any new project, you consider several factors. In
that how much/what percentage importance is given for green banking?
In that question their answer is We always try our 100% effort regarding invest
related to green banking

13
th
Question was What steps are taken for saving papers as well as tress?

Collective answer is we are trying to preserve our documents in CD other than
hard copy. Printing in both side of a single page and printing ink quality always
economy mode or less color.

14
th
Question was Give me some information about Islami banks green banking
activities Collective answer is :-
i) Before investing any investment to any industry, we investigate whether these remain
any treatment plant or not
ii) Branch wise we always preserve our documents through CD.
iii) We now introduced Remittance card to people
iv) We are now encouraging people to use ATM cards and ATM service.


145
v) We are conducting different seminars for make people aware for using ATM cards,
Mobile banking service, Internet services, online banking as well as Green Banking.
vi) We gave tree to our account holder as our tree plantation programme.
vii) We are working with farmers for helping them.
viii) Our entire task is accomplished through network and fast.
ix) A team investigates where the invertors doing well or not according to investment
contract in regular basis.
x) Investing on renewable energy and advising and working with entrepreneur to ensure
green banking.
xi) Maintain all rules and regulation that Bangladesh Bank declared for Green Banking.
xii) Ensuring maximum recycling/processing of waste/detrimental by-products;
xiii) We have taken many Environment friendly projects
xiv) We are investing on Brick field (Zig-Zag) with ensuring that the brick field is
maintaining the environment rules of government.
xv) We have invested on CNG Re-fuelling projects.

15
th
Question was Would you please tell about some green baking activities of Amin
Bazar Br.
Answer is employees of Amin Bazar Branch are advise to make aware all the
clients about reducing Gas consumption, pollution and other wastage of other
resources. This branch now trying to increase ATM, Mobile banking, internet
banking services and trying invest in environment friendly projects.

16
th
Question was Future Planning for Amin bazar Br. about green banking
Answer for these question is N/A or it is subject to head office or top class
officer mainly this may not their sector but they told they have a program to
reach to 16 crore people of Bangladesh. And their will be no need to have any
branch service. All the funtion will be done by using internet or mobile from their
own living place.



146
Final and 17
th
Question was Some recommendation that Islami Bank can do for batter practice
of Green Banking
Answer is :
I. Bank should not provide much vehicle loan
II. Bank should establish internal recycling system for recycling its wastage.

























Manager and VP of IBBL Amin Bazar is giving his speech at
green banking awareness program to the clients of this Br.



147
9.3 NECESSITY OF GREEN BANKING AT AMIN BAZAR BRANCH

FIGURE 10: SECTOR WISE INVESTMENT PERCENTAGE OF AMIN BAZAR BRANCH


Amin Bazar, a union of Savar upazila, is one of the most developing areas adjacent to Dhaka
city. Most of the populations of these areas are depend on various businesses. The adjacent area
to the east of Amin Bazar is Gabtoli, Majar Road, which are commercially as well as
residentially important. The bank of the Turag (river) is also commercially important, where in
huge volume of stone, sand, cement are brought for trading. One of the largest cattle markets of
the country is situated near Amin Bazar. Due to the location of Gabtoli bus terminal, Turag river
port, the Branch has tremendous scope to invest in transport sector. Most of the investment of the
Industrial,
1.571%
Commercial,
29.968%
Real Estate,
7.116%
Transport,
55.651%
House hold
durable
scheme,
0.097%
Others, 0.708%
Staff House hold
durable scheme,
0.044%
Small
Business
Investment
Scheme,
1.506%
Staff house
building
investment scheme,
3.118%
Car Investment,
0.221%
Palli griha Nirman,
0.001%


148
branch goes to transport, bricks, real estate, construction goods, hardware and workshop sectors
etc.

FIGURE 11: SECTOR WISE NO. OF INVESTMENT CLIENT OF AMIN BAZAR BRANCH


Industrial, 4
Commercial, 602
Real Estate, 74
Transport, 103
House hold
durable scheme, 20
Others, 52
Staff House
hold durable
scheme, 16
Small Business
Investment
Scheme, 197
Staff house
building
investment
scheme, 38
Car Investment, 4
Palli griha
Nirman, 26


149
9.4 GREEN BANKING PERFORMANCE OF AMIN BAZAR BRANCH
Total Number of ATM card User of Amin bazar brance 1470
Total Number of Mobile Banking service User 350
Total number of clients of Amin bazar clients 40000
Amount of avg. daily transaction of Amin bazar brance 450,00,00,000
Amount of avg. daily transaction of Amin bazar br. By using ATM cards 6,50,000
Amount of avg. daily transaction of Amin bazar br. By using Internet banking 2,50,000
Amount of avg. daily online transaction of Amin bazar br 3,50,000
Amount of avg. daily transaction of Amin bazar br. By using Mobile banking 2,50,000
Amount of investment on Agricultural sector 1,50,00,000
Amount of total investment 183,00,00,000













Only 1% of its total investments on agricultural sector. So, that is not well for Green Banking


150












10 : FINDINGS & RECOMMENDATIONS:



151
10.1 FINDINGS
The report findings about green banking policy of Amin Bazar of IBBL and IBBL are given
below:
1. At the very beginning of this report we assume some qualitative hypothesis and from the
view point of chapter 5, 6, 7, 8, 9; now we can these hypothesis completely true.
2. A big portion of Amin Bazar Branchs investment is invested transport sectors, which is
one of the main contributors to pollute Dhaka City & Amin Bazar Branch has a great
scope to do green banking.
3. Amin Bazar Branch still didnt take necessary steps to do green banking. Though recently
they are providing internet facility to its School accounts and MSND account.
4. They have very low performance in ATM service, online service, and internet service.
Though the location of the branch is covered with uneducated people, business area of
coal, sand, road etc. for this reason client are not habituated with theses service but bank
can motivated business man to transact by using internet service.
5. Amin bazar branch is situated beside the high way road and there are no bus stoppage,
hospital, markets and always remain polluted air. So, general people (who are not living
in that area but use the high way) do not come to use ATM service. They may dont
know that there can be a ATM booth. They should increase number of ATM booth and
highlight the area of ATM booth.
6. Amin Bazar Branchs a large portion goes to brick field and the branch incumbent is
motivated to install Zig-Zag Chimne in their brick fields. Also to create awareness among
the clients, this branch organized seminar sometimes.
7. Before investing in any project they only consider on what Department of Environment
of Bangladesh ( ). gave certificate or not; and do the applicant have
adequate mortgage property or not.
8. Maximum numbers of Employees are not aware about Green Banking.


152
9. IBBL are now offering students accounts. That is a good idea but they just offering
minor students and guardian of those students are mainly operating this account. But
IBBL should focus specially on Student not Minor. Because they are now most advance
and using advance technology
10.2 RECOMMENDATIONS:
10.2.1 THE WAY OF TO GO AHEAD

Need to apply Green Banking and use ERM (Enterprise Risk Management) guideline in
an efficient manner.
Develop a culture within the organization based on environmental governance.
Further integration with Core Risk Management.
Apply quantitative approach for Environmental Risk Rating.
Need to develop database for technical assistance/issues.
10.2.2 WHAT CAN YOU DO AS A CLIENT?
Converting to online banking and mobile banking are two ways that you can do your part to bank
green and help the environment. Green banking via your computer or cell phone includes setting
up direct deposit to receive your paychecks, receiving electronic statements from your bank and
paying bills online. All of these steps can drastically reduce the amount of paper produced by
your bank. Online banking and mobile banking are also highly effective ways to keep track of
your finances and to avoid late payment fees.
Another green banking step you can take is to suggest that the company you work for sign up
for a product called "Remote Deposit". This service is offered by a growing number of banks to
their commercial customers. Remote deposit is the digital scanning and processing of checks
from your computer or smart phone. It is a convenient service without the paperwork and
environmental costs associated with traditional branch deposits.


153
Many banks claim to be be eco-friendly, but in fact do little to support environment initiatives
with the money you deposit with them. Ask your local bank exactly how they support the
environment before assuming that their self-anointed "Green Bank" label is deserved. Chances
are good that there is a bank in your local area that is more socially-conscious than their
competitors. If you open an account with that bank, then you are doing your part to support the
environment.
Finally, the more people who actively search for and support eco-friendly banks, the more
competition for deposits will increase. This will help raise the awareness for green banking.
Keep track of the latest news on green banking on Money Rates.
And also all the customer should close and avoid to have account to the bank which is investing
on unethical project as well as environment harming project. If people can create pressure for
their own safety, than banks and organization will bound to safe our environment greener.

10.2.3 WHAT CAN DO A BANK?
Bank can plays a vital rule in this case. We know our country is highly corrupted and all the
Government administration is totally corrupted. They can do anything in exchange of money. They
make rules and they break that rules. In our country number of transport, building is increasing day
by day. On the other hand cultivating land, trees is reducing. Rivers and cannels are filling for the
business purpose of real estate or food shop or park or visiting place. Water is contamination by
wastage of various industries. These all are harming our environment. Government made some rules
against that, at the same time government is giving license to them to do that.
Every year real estate companies increasing their business by increasing lend by accruing cultivate
lends, filing rivers, canals, even they cutting trees in Sundorban area, Coxs bazar zhau ban, and hilly
area of Shylet and Chittagong. Recently I have visited some villages that is far away from Dhaka city
and not too much developed. But I got surprised that by watching the banners of different real estate
groups. To buy huge area they need money. And it easily can say that this huge amount of money is
paid by bank indirectly as loan or investment. So, bank is responsible for harming environment this


154
time otherwise it would not possible to buy those land only by the stupid investor to fill the river,
cannels and cultivate lands.
On the other hand, farmers grow crops and all other vegetables, foods. But they dont get enough
return for their hard work. They sold their Sweat at bellow production rate and there can be seen
many drops of tear on farmers eyes. But we, as a final customer, buy those goods at a high price.
Now question is if farmers cannot make profit and we are paying high, where the money goes? its
easy to solve, some wholesaler buy those from farmers by creating syndicates and pressure and
finally they make artificial supply shortage in market and same way they make syndicates and
increasing price of goods. This is the reason why farmers are selling their lands. Like previous
situation, banks also responsible for this for making happy to their clients and earn some handsome
profit.
So, bank should not depend only on what Department of Environment of Bangladesh (
), gave certificate or not. They should have own parameter to measure ethical, legal and
logical project. At a time all the bank, if can stop investing or giving loan to unethical projects than
investor will bound to stop that harmful project and will make ethical project plan.
So, Banks should not wait for only on government rules, they must have specialists, own visiting
team. And make aware about the causes of environment pollution and result of harming environment.
10.2.4 WHAT CAN DO ISLAMI BANK BANGLADESH LIMITED SPECIALLY AMIN BAZAR
BRANCH:
As largest bank of Bangladesh Islami bank have many depositors, investors and other relation
with people. Islami bank can increase awareness of people to make seminar. They can make
bound and help to their investors or partners.
As Amin Bazar branch have RDS sector to help rural people, and obviously this is a very nice
project and will be effective if bank can run this properly, because Amin bazar branch have huge
scope. Branch can ensure green banking by this project, by financial support, legal support.
Branch can make a market where can farmers sell their goods at profitable price and final buyers
can have it at reasonable price. Islami Bank can some markets across the country and there will
be interlink with each market about supply and demand position, as it has huge network and


155
clients, Than farmers can sell and buy their necessary goods, and final buyer will be able to buy
at reasonable price. There will know chance for those reckless wholesalers who are involved
with unethical job.
Teen age or young people are the future of our country. They are the mostly user of technology.
IBBL should have plan for them. Have to offer special account for them. All technological and
updated facilities will have there and have to create awareness among them.



156









11 : CONCLUSION



157
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. The result: more green in your pocket. 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. Interestingly, online banking can
also increase the efficiency and profitability of a bank. A bank can lower their own costs that
result from paper overload and bulk mailing fees as more customers use online banking.
Banks can do much more to help the environment than just promote online banking. A truly
green bank will reduce their carbon footprint by building more efficient branches, implementing
energy-efficient operational procedures, offering transportation services for their employees,
promoting sustainable banking and increasing their lending in environment-sensitive industries.
Banks can also support eco-friendly groups and raise money for local environment initiatives.
In a rapidly changing market economy where globalization of markets has intensified the
competition, the industries and firms are vulnerable to stringent public policies, severe law suits
or consumer boycotts. This would affect the banks and financial institutions to recover their
return from investment. Thus, the banks should play a pro-active role to take environmental and
ecological aspects as part of their lending principle which would force industries to go for
mandated investment for environmental management, use of appropriate technologies and
management systems. As per the above discussion, we can say that customers are becoming
aware about various environmental issues and the hazardous effects of rapid industrialization, it
is necessary for organizations to attain sustainable competitive advantage by creating eco-
friendly products. Banks can protect themselves as a socially and ethically oriented organization
by disbursement of loans merely to those organizations, which has environmental concerns.
However, this can decelerate the economic and industrial growth but human race cannot afford
the fast pace of growth at the cost of environmental depletion. Green Banking if implemented
sincerely will act as an effective for the polluting industries that give a pass by to the other


158
institutional regulatory mechanisms. There has not been much initiative in this regard by the
banks and other financial institutions in Bangladesh though they play an active role in India's
emerging economy. The banking and financial sector should be made to work for sustainable
development. As far as green banking in concerned, Bangladesh's banks and financial
institutions are running behind time. Very negligent numbers of commercial banks in our country
have introduced green banking correct but also in a short range.
The number of green banks should be increased because the future prospect of green banking is
very bright in our country for the following reasons:
The banks are encouraged to be green by Bangladesh bank,
Recently the government made the companies mandatory to use solar plants to save
electricity.
Government has taken initiatives to digitize the banking transactions introducing online
Banking which encourage the paperless banking.
The commercial banks will be subsidized by Bangladesh bank if they start practicing
green banking and so on. It is time Bangladesh to take some major steps to gradually
adhere to the Green banking principles-guidelines that use environment sensitive
parameters apart from financial, to fund projects for sustainable development of the
country.
Banks and business in Bangladesh passed a critical year, surfing through an unprecedented
climate both at home and abroad in 2011. Amid challenges, the banking industry witnessed a
major change, deregulation in some major areas including the interest and exchange rate in the
outgoing year. Soaring inflation, record bank borrowing by the government, sliding foreign
investment, aid and remittances, a bearish stock market and lack of infrastructure were the main
barriers at the local level that left the banks in tight spot. A shift in imports form food grains to
fuel oils and fertilizers also affected banks business in the outgoing year. However the liquidity
crisis was the most discussed issue in 20l1. In the international front, ongoing sovereign debt
crisis in Europe, which is a major destination for Bangladeshs exports, and the troubled US
economy, also hit local businesses. IBBL has a great reputation for welfare banking in the


159
industry, thats why IBBL has an acceptance among the clients. The market is very competitive
and thats why, we think that green banking can be an effective instrument for keeping present
image to long term. Being the largest private sector commercial bank and having the maximum
stake-holders, IBBL has the ample scope for promoting the awareness about environment
friendly activities and it is utilizing the scope for disseminating awareness amongst the
masses accordingly to keep the globe eligible for habitation.
Islami bank needs to be made fully aware their clients of the environmental and social guidelines
to which banks worldwide are agreeing to as far as green banking is concerned, Islami Bank
Bangladesh Limited is far behind their counterparts from developed countries. If islami bank
desire to enter global markets, it is important that they recognize their environmental and social
responsibilities.
In addition to mitigating risks, green banking opens up new markets and avenues for product
differentiation. The survival of the banking industry is inversely proportional to the level of
global warming. Therefore, for sustainable banking, Bangladesh banks should adopt green
banking as a business model without any further delay



160

12 . REFERENCES
E-Books:
1. R.N. Dash, 2008, Sustainable Green Banking: The Story of Triodos Bank
Available at: www.scribd.com/doc/37388173/Sustainable-Green-Banking
2. Jan Willem van Gelder, (2006), Sustainable Banking in Practice: A closer look at the
nominees for the 2006 Financial Times Sustainable Banking Awards, Banktrack.,
Profundo.
Available at: www.accman.in/images/j11/Green_Banking_ (2).doc
3. Jeucken, M (2001) Sustainable Finance and Banking, The finance Sector and The Future
of the Planet. London, Earthscan.
Available at: www.accman.in/images/j11/Green_Banking__(2).doc
4. Pravakar Sahoo, Bibhu Prasad Nayak, 2008, Green Banking in India
Available at: teriin.academia.edu/bibhuprasadnayak/.../Green_Banking_in_India
5. Dr. K.A. Goyal and Vijay Joshi, 2011, a study of social and ethical issues in banking
industry.
Available at: www.ijeronline.com/.../Vol%202%20issue%205/ijer20110205SO(5)
6. Green, C.F. (1989). Business Ethics in Banking. Journal of Business Ethics 8(8) p. 631-
634.
Available at: www.academicjournals.org/AJBM/PDF/pdf2011/18Jan/Safakli.pdf
7. UNEP Finance Initiatives, 2002, Financial Institution Initiative Signatories,
Available at http:/unepfi.net/fii/signatories_country.htm
8. Manager Conference 2010 supplementary IBBL.

Web links:
i. http://en.wikipedia.org/wiki/Ethical_banking
ii. http://en.wikipedia.org/wiki/Ethical_banking
iii. http://www.Greenbankreports.com
iv. http://www.Bangladesh-bank.org/greenbankingorder
v. http://greenbankreport.com/eco-friendly-banking/what-is-green-banking/
vi. http://www.thedailystar.net/newDesign/news-details.php?nid=149676
vii. http://www.indianexpress.com/news/islamic-banking-can-boost-green-finance/812956/1
viii. http://www.bankrate.com/finance/savings/5-green-banking-tips-to-save-the-planet-1.aspx


161
ix. https://www.ing.be/en/retail/savings/savings-accounts/Pages/with-high-base-rate.aspx
x. http://www.investopedia.com/terms/o/onlinebanking.asp
xi. http://www.accountingtools.com/dictionary-remote-deposit-capt
xii. http://www.investopedia.com/terms/o/onlinebanking.asp
xiii. htpp://www.bb.org.bd/mediaroom/circulars/brpd/jan302011brpd01e.pdf
xiv. http://www.bb.org.bd/mediaroom/circulars/brpd/feb272011brpd02e.pdf
xv. http://www.banktech.com ; and so on
xvi. http://www.thedailystar.net/newDesign/latest_news.php?nid=32672
xvii. http://www.thedailystar.net/newDesign/news-details.php?nid=211470
xviii. http://www.thefinancialexpress-bd.com/more.php?page=detail_news&date=2012-02-
07&news_id=97263



162
13 APPENDIX:
13. 1 SECTOR WISEDETAILS INVESTMENT POSITION 2012 TO 2011


























163

























164





























165
13. 2 POSITION OF AMIN BAZAR BRANCH AT 31. 12. 2012





166
13. 3 RESUME OF MD. SHARIFUL ISLAM
MD. SHARIFUL ISLAM
CONTACT ADDRESS:
SHAMOL SYA-3 (FLAT NO: A 3), BDDL NOTUN DHARA, RING ROAD, SHAYMOLY,
DHAKA, BANGLADESH
E-MAIL: SHARIF_FASAUB@YAHOO.COM
PHONE: 017-12-710359 (CELL)

PROFILE
I am a student of major in finance (completed 114 credit hours, up to 11
th
semester) from the Faculty of
Business, ASA University Bangladesh.
I have a sound academic background with CGPA 3.868 in all the examinations and hold basic knowledge in
computer software packages like MS office package, SPSS, Minitab.
I have experienced to organize seminars, workshops which I have earned from my academic work as well as
from the social activities and I am a member of ASA University Debating Club and ASA University
Business Club
I am friendly person and love to interact with people. I like to read all kinds of books, listen to music, watch
movie, travel the countryside, play cricket and football, learn new things. I have a strong belief in honesty
and hardworking.

PROFESSIONAL GOAL
I want to be a part of a team or line-up, where there is an opportunity to make significant contribution in the
contemporary area of economic development for the better improvement of my country, the organization along
with developing personal skills.

EDUCATIONAL QUALIFICATIONS
2012
Major: Finance
Bachelor of Business Administration (BBA)
CGPA: 3.868 in a scale of 4
ASA University Bangladesh, ASA Tower, 23/3, Khilji Road, Shymoli, Dhaka-
1207, Bangladesh
2006
Group: Business Studies
Higher Secondary Certificate (HSC)
GPA: 4.80 in a scale of 5
B. A. F. Shaheen College, Jessore-7400, Bangladesh
2004
Group: Science
Secondary School Certificate (SSC)
GPA: 4.25 in a scale of 5
Jhikargacha M. L High School, Jessore-7420, Bangladesh

TRAININGS/WORKSHOPS/SEMINARS ATTAINED
Trainings 3 days training session on Managing Finance organized by Dhaka Chamber of
Commerce &Industry (DCCI) Business Institute.
2 days training session on Project Management A to Z Using
Project 2007 Professional Organized by Prothom-Alojobs.
Workshops 3 hours session on How to solve Business Case organized by Business Club-
ASAUB
3 hours session on Career Development organized by Business Club-ASAUB




167
LANGUAGES EFFICIENCY
Languages Reading Writing Speaking
Bengali Good Good Good
English Good Average Average

COMPUTER LITERACY
Word Processing Skill: MS Word Good
Presentation Skill: Microsoft Power Point Good
Analytical skill: MS Access, MS excel, Statistical Package
for Social Science (SPSS), Minitab
Basic
Web Language: HTML Basic

EXTRA CURRICULUM ACTIVITIES
It is my pleasure to say that I got the University scholarship from 2008 to 2011.
You will be glad to learn that I am the group leader, which group achieved 3rd position in Business Case
Competition at 2011 organized by ASAUB business club.
I am the captain of my section football team and we are the champion team of Inter-section football
Competition organized by ASAUB 4th Batch.
Apart from these, I have been participated, arranged and organized several cultural activities both in college
and University life.

ID INFORMATION
Name
Parents
Nationality
Date of Birth
Marital Status
Permanent Address
Md. Shariful Islam
Md. Abdur Razzak & Mst. Shamsun Nahar
Bangladeshi
December 6, 1989
Single
ChotoMeghla, P.O-GazirDargha, P.S-Sadar (Jessore) Dist. Jessore.

REFEREES
Academic Referee Dr. Iqbal Hossain
Professor and Chairman, Department of Business Administration,
ASA University Bangladesh(ASAUB)
Phone: 8122555, 8130283 (Ext.318), Cell:+88-01715012096,
e-mail: ihossain48@yahoo.com
Academic Referee Md. Mahmudul Huq
Senior Lecturer (Finance), Faculty of Business
ASA University Bangladesh(ASAUB)
Phone: 8122555, Cell:+88-01712678838,
e-mail: mahmudulhuq@yahoo.com

I, hereby, declare that to the best of my knowledge and belief, these data correctly describe me, my qualifications
and my experience.


(Md. Shariful Islam)
Signature & Date