Internship Report on Green Banking 2013 (Prime Bank Limited)

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Socially Responsible Banking Sustainable Banking






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Green Banking Report | 3 August 20, 2013

Suborna Barua Lecturer

Department of International Business University of Dhaka

Subject: Submission of the Internship Report. Honorable Sir,

It is my pleasure to submit my internship report on “Green Banking Practices of Prime Bank Limited”. This report is a result of the Internship Program that I have accomplished for a specified 15 days in the Green Banking Unit at the Head Office of Prime Bank Limited. I have tried my level best to make this report comprehensive and informative as possible within the time allowed.

I hope this report will meet the standards of your judgment. Sincerely Yours,

Asif Al Nahian

Kazi Asif Al Nahian ID: 02-200935 BBA 15th Batch

Department of International Business University of Dhaka


Green Banking Report | 4 This is to certify that the internship report on “Green Banking Practices of Prime Bank Limited” as a part to fulfill the requirement of Bachelor of Business Administration, (B.B.A) degree from the Department of International Business, University of Dhaka has been carried out by Kazi Asif Al Nahian, student ID-35, a student of BBA 15th Batch under my supervision. No part of the internship report has been submitted for any degree diploma, title, or recognition before.

……… Date:

Suborna Barua Lecturer

Department of International Business University of Dhaka


Green Banking Report | 5 First of all I would like to express my deepest gratitude to the almighty for giving me the composure to finish this work.

Internship program provides an opportunity to experience the real world scenario and helps to develop own judgments. And doing my internship on the Green Banking Practices of Prime Bank Limited was a great experience for me.

Here I would like to express my heartiest gratitude to my Intern Supervisor Mr. Subarna Barua for his sincere cooperation and suggestions to complete my job.

I would like to express my gratitude to the Head of Green Banking Cell of Prime Bank Limited for giving me a chance to work as an intern in his department.

Finally I am really grateful to my teachers and to the officials of Bangladesh Bank for giving me such an opportunity to work in this project.

Kazi Asif Al Nahian ID: 02-200935 BBA 15th Batch

Department of International Business University of Dhaka


Green Banking Report | 6 The concept Green Banking evolved in western countries and now is practiced in most of the countries in the world. It indicates endorsing environment-friendly practices and reducing carbon footprint from banking activities. Green banking is not just another corporate social responsibility activity; it is all about going beyond to keep the world livable without any significant damage. Green banking that considers all the social and environmental factors is also called ethical banking. The main objective of green Banking is to ensure the use of organizational resources in favor of the environment and society. Green banking as a concept is proactive and smart way of thinking with a vision for future sustainability of our only Spaceship earth.

Bangladesh Bank is the first central bank in the world that has taken real initiatives to facilitate the way of Green Banking practice. With some specific guidelines and legal frameworks the central bank of Bangladesh has been urging all the commercial banks in Bangladesh to develop their own Green Banking Policies.

This paper is an attempt to analyze the Green Banking Practices of a renowned private commercial bank in Bangladesh, the Prime Bank Limited and identifying the efficiency or inefficiency of the initiatives taken by the bank regarding Green Banking.


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1.1 Introduction 9

1.2 Origin of the Study 10

1.3 Objective of the Study 10

1.4 Methodology of the Study 11

1.5 Limitations of the Study 11



2.1 About Prime Bank 13



3.1 About Green Banking 15

3.2 Evaluation of the Idea of Green Banking 16-17

3.3 Components of Green Banking 17

3.4 Challenges towards Green Banking 18 3.5 International Initiatives of Green Banking 19-20 3.6 Green Banking Products & Services in the World 21-27 3.7 Green Banking Practices in Bangladesh 28-32



4.1 Green Banking in Prime Bank Limited 34 4.2 Concept of Management About Green Banking 35 4.3 Formal Document of Green Banking 36 4.4 Reasons for Introducing Green Banking 37 4.5 Green Banking Components of Prime Bank Limited 38-40 4.6 Management Framework of Green Banking in Prime Bank 41-42 4.7 Institutional Arrangement for Green Banking 43-47 4.8 Dimensions & Coverage of Green Banking Activities 48 4.9 Green Banking Best Practices 49-50 4.10 Policy Framework of Green Banking Activities 51-52








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An internship program is a very good approach to co-relate the practical work experience with the theoretical knowledge because it provides an individual the great opportunity to work in an organization with some specific objectives. As a result it bears great importance in case of business graduates.

As an intern it was a great opportunity for me to work in one of the reputed private commercial banks of Bangladesh, the Prime Bank Limited. During this period I had the opportunity to work in the Green Banking Unit at the Head Office of Prime Bank Limited.

Green Banking or Sustainable Banking as a concept is not very new around the world. Global warming, unusual weather pattern, rising greenhouse gas etc. has always urged the business world to take some responsibilities in safeguarding the planet. Consequently environment friendly banking practices emerged in many western countries.

However, in our country, the central bank of Bangladesh, Bangladesh Bank has taken the real initiative to make the financial industry more environment friendly and responsible by formulating a detail Green Banking Policy Guideline in February 27, 2011.

Now, the main objective of my internship program was to evaluate the Green Banking practices of the Prime Bank Limited and this report is basically a result of experience in the Green Banking Unit of the Prime Bank Limited.


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As a requirement of the completion of the Bachelor of Business Administration degree under the Faculty of Business Study at University of Dhaka, I was assigned to do my internship at the Head Office of Prime Bank Limited for a specified period of 15 working days from May 30 to June 19, 2013 as an intern. During this period I worked at the Green Banking Unit under the Risk Management Division of the Head Office of Prime Bank Limited. The objective of my internship program was to understand the different aspects of Green Banking activities of Prime Bank Limited. This report is a formal documentation of this internship program.


The objective of this report can be viewed from two perspectives.

1) General Objective 2) Specific Objective

General Objective: This internship report is primarily prepared as a requirement ofthe completion of Bachelor of Business Administration degree under the Faculty of Business Studies at University of Dhaka.

Specific Objective: The specific objectives of this report are-

a) To find the historical evaluation of Green Banking at Prime Bank Limited. b) To find the reasons for introducing Green Banking.

c) To find the concept of the institutions management about Green Banking.

d) To analyze the components of Green Banking & their effectiveness of Prime Bank Limited.

e) And finally to identify the major areas of efficiency or inefficiency of the bank regarding its Green Banking initiatives.


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The objectivity of any study depends largely on how methodologically it is done. For the purpose of this report I have used both qualitative and quantitative information to give it a clear judgment opportunity.

All the information used in this report are from two major sources. These are:

Primary Sources:

 Face-to-face interview with the concerned employees of the bank.

 Conversations with my classmates.

 Practical work experience in the Green Banking Unit under the Risk Management Division of the bank.

Secondary Sources:

 Quarterly Reports of Prime Bank Limited about Green Banking.

 Annual Report of the Prime Bank Limited 2012.

 Reports published by Bangladesh Bank.

 Some national & international journals about Green Banking.


Almost every research work has to face some limitations in its completion. Limitations of a study are those issues that if analyzed could be more helpful for the study. This internship report is not also out of limitations. For the purpose of acquiring data to prepare this report I faced some constraints that are listed below:

Lack of Published Materials: No kind of published materials was provided to me during my internship period. The division only allowed me to review their materials. As a result this report is in lack of some specific reference papers in the appendix part.

Time Constraint: Covering the entire Green Banking performance of the bank was a difficult task within the time allowed for the internship program.

Lack of Experience: Preparing a formal document like an internship report requires some prior experience in this field. I have tried my level best to reduce the distortion or biasness of information that I have used in this report.


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Prime Bank is one of the reputed private commercial banks working in Bangladesh. The bank started its journey on 17th April 1995 by a group of successful local entrepreneurs.

Within a very short span of time Prime Bank has made significant progress in the industry and has been graded as top class bank in the internationally accepted CAMELS rating.

At present the bank has 130 branches operating in different areas in Bangladesh. As of annual report 2012, total paid-up capital of Prime Bank is Tk. 9,358 million.

Mission Statement

To build Prime Bank Limited into an efficient, market driven, customer focused institution with good corporate governance structure. Continuous improvement of our business policies, procedure and efficiency through integration of technology at all levels.


To be the best Private Commercial Bank in Bangladesh in terms of eficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.

Credit Rating

CRISL reaffirmed long term rating of PBL to “AA+” and short term rating to “ST-1” based on financials up to December 31, 2011.


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Global warming, which is one of the most burning & discussed issues, has the worst impact on the climate of the planet as a whole. Due to unusual weather pattern, rising greenhouse gas, declining air quality etc. society demands that business also take responsibility in safeguarding the planet.

Green Banking is one of the revolutionary concepts in today’s business world which basically refers to as sustainable banking, socially responsible banking or ethical banking that endorse environment-friendly practices and reducing carbon footprint from banking activities.

The main objective of Green Banking is to ensure the use of organizational resources in favor of the environment and society. Green banking as a concept is proactive and smart way of thinking with a vision for future sustainability of our only Spaceship earth. So in a very specific way- Green Banking means banking practices that foster

environmentally responsible financing practices as well as using environmentally sustainable internal processes.

Morshed, Rubayat and Singha (n.d., p. 11) explained that Green Banking can be viewed from two different approaches as follows:

Transformation of Internal Operation:

Firstly, banks can adopt appropriate ways to utilize renewable energy sources,

automation and other measures to minimize carbon usage in banking activities.

Environmentally Responsible

Financing Policy: Secondly, banks should

consider environmental issues with utmost importance while financing or investing in project.


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Although the theoretical idea of Green Banking is not very old; some practices can be traced from the ancient banking & financial practices. During the 16th century religious

ethics, the environment and local community provided the main framework for both life and economy and therefore influence businesses and the financial sector as well. Besides, during the 19th century credit unions and financial cooperatives worked on the

criteria that were used as sustainability criteria later. (Weber n.d., p. 2)

These banks used some of the principles of the credit unions and co-operatives but added an ethical perspective to their business. Because of higher energy and waste management prices it was worthwhile for a service sector as well to be eco-efficient in order to reduce costs. At about the same time new environmental regulations influenced the responsibility of business for its environmental impact. After mainly managing costs and risks connected with environmental issues the financial sector began to explore business opportunities connected with sustainable development as well. Weber (n.d., p. 3) also stated that in the beginning of the 1990 the first sustainability mutual funds, indices and other financial products and services were

Following the political disturbance in the 1960s and first discussion about environmental and social

responsibilities of business, the first ethical banks were founded in the 1970s. They wanted to re-integrate ethics into the financial business. (Weber n.d. p. 2)


Green Banking Report | 17 launched. Since then their market share is increasing. They changed the landscape of financial products and services as they re-integrated non-financial issues like the environment or sustainability into financial decision making processes and product development.

Weber (n.d., p. 3) again explained that another event that influenced the financial sector to consider environmental responsibility was the launch of the Kyoto Protocol on climate change mitigation. Because financial instruments were needed to reduce carbon emissions, the financial sector engaged in creating products and services around carbon reduction, carbon offsets and financing projects under the Kyoto Protocol mechanism. However, today the view about social or environmental responsibility in changing from managing environmental risks into creating positive impacts on sustainable development by using different financial products and services. This new view is reflected in the Global Impact Investment Network (GIIN) and in the Global Alliance for Banking on Values (GABV) both of which emphasizes the positive role that the financial industry can play in fostering sustainable development.


The scope of Green Banking is huge- leading to the way of Green Economy in a broad sense. So determining all the components of Green Banking is a difficult task. However, the following can be a short checklist of the components of Green Banking.

Online banking

Green Accounts (ATM Service)

a) Paying bills online,

Green Financing

b) Remote deposit/ bKash

Power Savings Equipments

c) Online fund transfers

Green Debit Cards/ Credit

d) E statements Cards e) Automated clearing

Save Paper house

Mobile Banking


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Although the concept of Green Bank is considered as a sustainability issue but it is true that achieving the actual response of Green Banking initiatives is associated with some major challenges like:


Green banks will be screening their customers and naturally, they‟ll be limiting and restricting their business to those entities that qualify. With a smaller pool of customers, they‟ll automatically have a smaller profit base to support them. If they focus their loans on certain industries, they open themselves up to being much more vulnerable to economic shifts.


Apparently, it takes 3 to 4 years for a typical bank to start making money. Many green banks in business today are very new and are still in startup mode. It doesn‟t help that these banks are trying to get their footing during a recession.


Again, while the main goal of a green bank is to do good by supporting those who are taking care of the environment, the question here is — just how much money is there in these businesses and in the eco-friendly industry? Saving the environment does not necessarily equate to “making a profit”. Hopefully though, this premise is proven wrong in this case and that green banks prove that they can survive, even as they face restrictive requirements for doing business.


Green banks require specialized talent, skills and expertise as well, due to the kind of customers they are servicing. Employees, such as loan officers, need to have additional background and experience in dealing with green businesses and consumers. Plus, giving breaks to such clients via discounted loan rates can eat at their profit margins.


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.


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Environmental responsibility has always achieved importance from the international community. During early 1990s there had been a growing concern about the environmental management system because of increasing energy prices and new environmental regulations. However, from that time financial institutions have been trying to mitigate social and environmental risk issues by introducing different environmental friendly policies & operations. Today the financial sector has begun to explore business opportunities connected with sustainable development one of the result of which is the concept of Green Banking. According to Pravankar (2008, p. 8)-in the beginning of the 1990 the first sustainability mutual funds, indices and other financial products and services were launched.


During the early 1990s the United Nations Development Programme (UNEP) was launched which is now known as UNEP Finance Initiatives. The objective of this initiative was to integrate environmental considerations into the regular business operations, asset management, and other business decisions of the banks. (Pravankar 2008, p. 8)


Pravankar (2008, p. 9) also mentioned that during the year 1991 to 2002 some renowned international organizations had taken different initiatives regarding environment friendly business practices like:


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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. Then a small group of banks along with IFC came 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.


The Equator Principles (EPs) is a credit risk management framework for determining, assessing and managing environmental and social risk in Project Finance transactions. It is based on the International Finance Corporation Performance Standards on social and environmental sustainability and on the World Bank Group Environmental, Health, and Safety Guidelines. (The Equator Principles 2006, p. 1)

There are 10 broad principles under the EP framework. Eventually these principles have become the industry standard for environmental and social risk management and financial institutions, clients/project sponsors, other financial institutions, and even some industry bodies refer to the EPs as good practice.

Currently 79 adopting financial institutions (77 EPFIs and 2 Associates) in 32 countries have officially adopted the EPs, covering over 70 percent of international Project Finance debt in emerging markets.


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Today there are a number of banks and other financial institutions around the world who are offering their customers different products and services that are environmentally sustainable. Some of these products are really innovative and some are traditional with some benchmarking environmental features.

However, according the report of IFC Consulting Canada Inc. 2007, Green Banking products and services around the world can be seen from two broad perspectives- 1) Products and services related to Retail Banking and 2) Products and services related to Corporate & Investment Banking.



Product Features



Home Mortgage Government led „green‟

mortgage initiative.

1% reduction on interest for Dutch Bank Europe loans that meet environmental


Offers free home energy rating

Europe and offsets carbon emissions for CFS

(UK) every year of loan.

Generation Green™ Home Loan

Offered to both new and old

homes, so those with existing

Bendigo mortgages can take advantage of

Australia Bank

discounted rates.

All projects must exceed state requirements. Green Power Oriented Mortgage

Provides an incentive for

homeowners to use renewable


N/A N/A Design focuses on sustainable

behavior or customer, rather than on physical infrastructure of

their residence. MyCommunityMortgage™ and

Smart Commute Initiative

Fannie Mae


US (Citigroup)

Available to help borrowers buy


Green Banking Report | 22 public transportation.

Products feature a variety of options and flexible terms.

CMHC offers a 10% premium refund on its mortgage loan insurance premiums and

extended amortization to a CMHC

maximum of 35 years (subject to (CIBC, Canada lender availability) to purchase BMO)

energy efficient homes or make energy efficient renovations. Refund is a one-time payment.

Commercial Green Loans for new condos

Building Loans Developer repays loan with

funds that would otherwise be spent on operating costs using

conventional equipment and TAF/Tridel® Canada material.

Buildings must demonstrate 25%+ energy savings over conventional designs.

Provides first mortgage loans for building and refinancing LEED- certified commercial buildings. Developers do not have to pay

Wells Fargo US an initial premium for “green”

commercial buildings, due to features such as: lower operating costs and higher performance. Provides 1/8 of 1% discount on loans to green leadership


projects in the commercial or multi-unit residential sectors.

Home Equity One-Step Solar Financing

Loan Takes place over a 25-year term,


equal to the same period of time as the solar panel warranty.

Environmental Home Equity Program

Bank of

For customers using line of Visa US America

Access Credit, bank will donate to an environmental NGO. Bank signed a joint marketing agreement with Sharp Electronics Corporation to offer

customers easily accessible and Citigroup US convenient financing options to


Green Banking Report | 23 purchase and install residential

solar technologies.

Enables users to take out a home equity loan or line of credit rather than access savings or take out a general loan.

Auto Loan Clean Air Auto Loan with

preferential rates for hybrids

Product recently redesigned to VanCity Canada cover all low-emitting vehicle

types. GoGreen® Auto Loan

Product has achieved worldwide recognition as a successful

“green” product. Mecu Australia Since launch, the bank‟s number

of car loans has increased by 45%.

Fleet Loan Small Business Administration

Express loans, with rapid approval process, no collateral and flexible terms, are offered to

Bank of

truck companies to finance fuel US America

efficient technologies.

Helps to purchase SmartWay Upgrade kits that can improve fuel efficiency by up to 15%.

Credit Card Affinity Cards

Bank partners with ENGO, which accepts future royalties in

Various Various exchange for the use of its name

and logo. APR 15-22%, many with annual fees. Climate Credit Card

Bank will donate to WWF. Sum of donation depends on the

Rabobank Europe energy-intensity of the product

or service purchased with the card. GreenCard Visa


The world‟s first credit card to Europe Holding

offer an emissions offset (NL) B.V.


BarclayBreathe Card

Include discounts and low borrowing rates to users when buying “green” products and

Barclays UK services.


Green Banking Report | 24 50% of card profits will go to

fund emissions reduction projects, worldwide.

Existing cardholders can donate Bank of US Visa WorldPoints rewards to America

organizations that invest in GHG reductions or redeem them for “green” merchandise. Bank donates £1.25 per £100 spent by personal (Co-op debit and credit cards) and business


customers (Co-op Business Visa) to the bank‟s “Customers Who Care” Campaigns.

Deposit Landcare Term Deposit

Australia‟s first environmental deposit product.

Westpac Australia For every dollar spent, bank

lends equivalent to support sustainable agriculture practices. EcoDeposits®

Fully-insured deposits earmarked for lending to local energy efficient companies aiming to reduce waste/pollution, or conserve Shorebank natural resources. US Pacifc EcoCash™

Checking Account allows for 5 free paper checks a month, with US$3 per check fee applied. A portion of this fee goes to The Climate Trust.

Sales Consumers can offset CO2

emissions associated with air travel, with no funds being


channeled to the bank. Europe HSBC

This new initiative is in partnership with the offsetting organization Climate Care.


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Product Features

Banks/ FI


Project Finance Specialized service divisions BNP Paribas

are dedicated to long-term (Wind),

financing of clean energy Rabobank,

projects. Barclays,

Global Some banks also specialize in Fortis,

one (or several) renewable Standard technology type and/or place a Chartered

premium on working with Bank, states where regulatory WestLB framework and government (Biofuels policy encourages the early and Wind) adoption of clean technologies.

Led the effort to raise $1.5 billion of equity for the wind power market in 2006, with approximately $650 million allocated to its own portfolio. The farm‟s renewable energy portfolio now comprises

approximately $1 billion of JPMorgan US equity investments in 26 wind

farms since its inception in 2003.

The farm is also actively pursuing investments in biomass, geothermal, and solar power. Portfolio financing technique

Combines the financing of a

portfolio of renewable energy Dexia

US projects to the construction (Wind)

risks associated with project development. Lead arranger on energy-from- waste project financing that includes a 25-year loan

Bank of

supported by waste contracts Europe Ireland

with local authorities and corporate backing on non- contracted waste.

Partial Credit Financial institution provides a

Guarantee bond issued by a municipality

IFC Global to finance environmental


Securitization A risk sharing arrangement for


Green Banking Report | 26 Financial institution represents

a guarantor (or structuring IFC Global investor) at the mezzanine

level of risk, allowing client to transfer risk to bank. Eco-Securitization scheme will test the feasibility of financing “natural infrastructure” by

IFC and

linking sustainable Global DFID

management of resources with the funding capacity and requirements of asset-backed securitization.

Green Mortgage-Backed Securities (Proposed).

Designed to package mortgages on buildings that meet specific energy-use and

Not yet

environmental benchmarks. US implemented

Products would be rated higher and worth more as a result of the operational benefits associated with “green” buildings.

Bonds Forest Bond designed to fund

large-scale reforestation in Panama.

Latin Reinsurers underwrite a 25-yr Various

America bond, while investors and

frequent users of Panama Canal will purchase the bond. Cat Bonds provide ancillary

capital for risks from natural BNP Paribas, catastrophes. Goldman

Can pay higher than average Sachs, Global yield, while diversifying Lehman

investors‟ portfolios and Brothers improving industry reserves.

Technology Provides environmentally-friendly Deutsche

Leasing technologies at preferential rates. Bank,

ABN Europe

AMRO, and

ING Group

Private Equity Private equity investments in

wind, solar and bio-fuels through

Alternative Investments‟ Citigroup US Sustainable Development

Investment Program.

Private equity focused on forest conservation and


Green Banking Report | 27 preserving biodiversity.

Provides 100% financing, with

a discounted rate on the loan, Bank of

US to a non-profit organization to America

acquire biologically sensitive land and implement sustainable forestry practices and management.

Indices Series of environmental


private investor eco-market US/ AMRO,

products includes a bio-fuels Europe JPMorgan

commodity basket, total

returns solar energy index, clean renewable energy index and total returns water index (e.g., enables interested parties to invest in water as a commodity).

Carbon Finance Banks provide equity, loans

& Emissions and/or upfront or upon Barclays

Trading delivery payments to acquire Capital,

carbon credits from CDM and HSBC, JI projects. Fortis, ABN Most acquire carbon credits AMRO,

Global in order to serve their BNP Paribas,

(Mainly corporate clients‟ compliance JPMorgan,

Europe) needs, supply a tradable Goldman

product to the banks‟ trading Sachs, desks, or develop lending Citigroup, products backed by emission among allowances and carbon others credits.

Allowance trading products can include, but are not limited to: discreet placement of physical orders;fixed-or- floating swaps and indexed

sales or purchases; options; Various Europe allowances repurchase

structures; market-making for spot and forward trades; and price hedging based on cross- commodities.


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The economic development of any country is inextricably linked with environmental issues because activities of financial institutions may boost wealth creation as well as environmental degradation. Bangladesh is identified by climate change experts as being among the countries more severely challenged by climate change threat with correspondingly high urgency of preparedness with mitigative and adoptive responses. The government and the central bank of Bangladesh is fully conscious about this issue and have played a proactive role in this regard.

As being realized that bank as a responsible financial institution has a significant role to play in these game changing developments, Bangladesh Bank, the central bank of Bangladesh has taken the first initiative to make activities of the financial institutions of Bangladesh more environmentally responsible at the beginning of the year 2011.

Green Banking as a concept of sustainable banking practices was formally introduced in Bangladesh on February 2011 with the development of an indicative Green Banking Guideline for Banks and Financial Institutions by Bangladesh Bank. The main objective of this guideline is to give a detail and indicative advice to all the commercial banks of Bangladesh to adopt environment friendly financing policies as well as to take appropriate initiatives to make internal operations more energy efficient and environment conscious.


With a view to encouraging sustainable development in Bangladesh, the government of Bangladesh has formulated two important documents namely the Environmental Conservation Act 1995 and the Environmental Conservation Rules 1997. These two documents basically make the ground rules for Green Banking in Bangladesh.

In January year 2011, Bangladesh Bank as a regulatory body in the financial sector of Bangladesh had formulated the Environmental Risk Management Guidelines for Banks and Financial Institutions. The ERM guideline basically represents structured formats of addressing environmental risks in project financing and also provides standards in this regard.

Besides, in February 27, 2011 Bangladesh Bank formulated the Green Banking Policy Guidelines that provides a standard format for the commercial banks in Bangladesh to develop their own Green Banking Policy.

The Green Banking practices in Bangladesh can be viewed from three perspectives: 1) Initiatives taken by Bangladesh Bank, 2) Initiatives taken by Government & 3) Initiatives taken by other commercial banks.


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Bangladesh Bank is the first central bank in the world which has taken real initiatives according to a definite agenda in its vision and mission to play a specific role in Green Banking. With the different initiatives of in-house green activities, the authority has developed an indicative Green Banking Policy on February 27, 2011 which aims to provide a detail guideline to all the commercial banks to adopt Green Banking policy. (Morshed et al. 2012, p. 5) The policy is to be rolled out in the following three phases:


Green Banking Report | 30 Besides developing a formal guideline regarding Green Banking practices, Bangladesh Bank has also launched a refinance program of Taka 2 billion for different types of Green financing like Solar Irrigation Pump Station, Solar Home System, Bio Gas Plant, ETP, HHK and Solar PV module assembling plant.


The government of Bangladesh has already invested USD 10 billion over the last three decades to make the the country climate resilent and less vulnerable to disester. According to Morshed, Rubayat & Singha (n.d., p. 4) over the past three fiscal years (FY2009-10 to FY 2011-12) the government has allocated USD 300 million under the following two specialized funds regarding sustainable development:


According to Morshed et al. (2012, p. 5) With some formal guidelines of Bangladesh Bank as well as government, the commercial banks of Bangladesh have also come up with some remarkable initiatives regarding green banking like:

Policy Formulation and Governance Climate Risk Fund

Budget Allocation Green Marketing

Green Banking Unit/Cell/Desk Green Banking

Incorporation of Environmental Risk in Core Branches powered by Solar Energy

Risk Management (CRM)

Bank‟s In-house Green Activities Improved In-House Environment Management

Green Finance Employee Training, Consumer Awareness and


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According to the report of Bangladesh Bank the top 10 banks in Green Banking activities by the end of the year 2012 are:

1. AB Bank Limited 2. Bank Asia Limited 3. Eastern Bank Limited 4. EXIM Bank Limited 5. IFIC Bank Limited

6. Islami Bank Bangladesh Limited 7. Prime Bank Limited

8. Rupali Bank Limited 9. Social Islami Bank Limited


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TOP 10





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The Prime Bank Limited started its journey in 1995 and within a very short period of time the bank achieved a very good reputation in the industry. From the inception sustainable development and reputation building was the focus of all banking activities of the bank. As a result the bank has been graded as top class bank by the internationally excepted CAMELS rating.

Md. Shirajul Islam, the Ex Chairman of the Prime Bank Limited was the pioneer of the Green Banking Initiatives in the organization. Under his direction the Prime Bank Limited started its online banking service from 2010.

At the beginning of the year 2011 when Bangladesh Bank formulated the Policy Guidelines for Green Banking and urged all the commercial banks to introduce the Green Banking concept, the Prime Bank as a responsible corporate citizen formulated a Green Banking Committee and a Green Banking Cell under the Risk Management Division and on December 27, 2011 the GBC developed the Green Banking Policy of Prime Bank Limited.

During the year 2012, the Prime Bank Limited has made BDT. 3589.37 million Green Finance for installation of ETP and projects having ETP. Besides, 12 branches and 5 SME/ ATMs have been powered by solar energy. The GBC of the bank has developed a Green Office Guide and two Sector Specific Policies by this time of the current year.


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As a responsible corporate citizen the Prime Bank Limited has come up with real initiatives to introduce Green Banking in the organization. By this time the bank has formulated a Green Banking Cell under the RMD, incorporated the Environmental Risk Management Guidelines into the Core Risk Management Guidelines and prepared an indicative Green Banking Policy and instructed employees accordingly.

However, although the management committee of the Prime Bank Limited is conscious about the environmental responsibilities of a financial institution but it thinks that taking all the initiatives as instructed by Bangladesh Bank is not possible. For example: there is a lack of real initiatives of the bank in developing Green Products like Green Credit Cards or Green Deposit Accounts both of which associates some environmental features. The management thinks that providing such products will initially increase the charges from customers and there is also a lack of willingness and awareness of clients about environmental responsibilities.

Another important issue is that, virtualization of all the banking products like different kinds of memos, forms, documents, bills etc. and banking services like online facilities for running different kinds of accounts is very difficult. The reason is that most of the clients don‟t have access to internet for running virtual accounts. Besides, clients demand printed documents as evidence of their banking activities.

Besides, the management of Prime Bank thinks that guidelines of in-house environment management should be adopted in all branches. But the MANCOM also thinks that it will take time. Location creates a big problem in transforming existing materials into more energy efficient one.


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Green Banking Policy Guideline: As per BRPD Circular No. 2 of Bangladesh Bank, the Prime Bank Limited has formulated its own Green Banking Policy at December 27, 2011 which is called “PBL’s Environmental Blueprint”.

Green Office Guide: The Green Banking Cell as per instructions from the management committee has formulated an instructive Green Office Guide which is yet to be approved by the MANCOM.

Sector Specific Policy: The GBC of the Prime Bank Limited has also formulated two sector specific policies recently which are also yet to be approved by the MANCOM. These are:

1. Sector specific policy for RMG & Textile Industry 2. Sector specific policy for Ship Breaking Industry

Quarterly Report to BB: The bank has also developed a standard reporting format with the instruction of Bangladesh Bank to report to the BB on a quarterly basis about the Green Banking activities of the bank.

Sustainability Report: Disclosure of the Green Banking initiatives or sustainability report is a requirement under phase two of the Green Banking Policy of Bangladesh. Prime Bank Limited has published two reports about Sustainability & Green Banking Initiatives of the bank in the annual report of 2012.


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Prime Bank Limited is one of the reputed private commercial banks in Bangladesh. The management committee is very conscious about the goodwill of the bank and as a result there have been some initiatives like assessing the financing process carefully, providing internet banking facility to the clients etc. taken by the bank before the formal instruction of Bangladesh Bank regarding Green Banking. So from the viewpoint of GBC of Prime Bank Limited there are three core reasons side by side of BB instructions to introduce Green Banking in the organization. These are:

Credit Risk: Unusual weather pattern and global worming can cause financial institutions to suffer from credit risk. For example, adverse climate change may severely hamper a project financed by the bank and thus lead to a credit default. Realizing this issue Prime Bank Limited has rearranged its risk management policy by incorporating the Environmental Risk Management in its Core Risk Management Policy.

Legal Risk: Legal risk arises when financial institution finance to a project that is environmentally harmful. In that case the financing institution will be liable by the environmental acts. So this is another important reason to introduce more environment friendly financing policies.

Reputational Risk: In recent times bank are facing extreme reputational risk arising from some recent big loan scandals. Besides, the environmental awareness is also increasing day by day.

These issues together drive the Board of Directors of Prime Bank Limited to introduce a Green Banking Policy which is called “PBL‟s Environmental Blueprint” by the end of the year 2011.


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Components of Green Banking include the factors that affect the Green Banking activities of the bank. The following are the major components of Green Banking in Prime Bank Limited.


As per the instruction of Bangladesh Bank, Prime Bank Limited formulated it‟s Green Banking Policy which is called “PBL’s Environmental Blueprint”. According to Green Banking Policy of Prime Bank Limited, the policy shows PBL‟s view on environmental issues and describes the Bank's environmental risk management procedures and practices.

However, from my observation I have found that the policy is created highlighting the issues that should be done with reference Bangladesh Bank guidelines and instructions. Some specific issues of the policy represent unorganized information.

Besides, the effectiveness of policy also depends on the sound understanding of the policy. However, during my internship program at the organization I found that only one employee under the risk management division of the bank is overseeing all the Green Banking activities. The Green Banking Policy is not disclosed to all the concerned departments.


Climate Risk Fund is one of the major components of Green Banking. It is required as a precautionary measure for possible safeguards and mitigating hazards due to climate change. A Climate Risk Fund is also required for the banks as part of their CSR activities that relate to climate change conditions.

In 2012, Prime Bank Limited has created a Climate Risk Fund and up to the year 2012 it has allocated Tk. 60 million for this fund. However, by the end of the year 2012 the bank made no utilization of this fund.


Strategy of reuse, recycling of materials and equipments, and source reduction and waste minimization strategy is a part of in-house environmental management. The Green Banking Cell of Prime Bank Limited has developed a Green Office Guide to reduce water, paper and electricity consumption which is yet to be approved by the MANCOM. Without this there is no special initiatives taken in the bank to actually reduce the use of electricity, paper, water etc.


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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. Prime Bank financed various projects which are environment friendly. The projects which contribute to degradation or deterioration of the environmental issues are usually avoided. The bank financed Effluent Treatment Plants (ETP) of RMG and textile sectors and projects having ETP. In 2012, the bank extended finance of Tk. 94.42 million for installation of ETP and Tk. 346.28 million for financing projects having ETP.

However, in case of Green Finance, Prime Bank has exposure in only two sectors-Installation of ETP & Projects having ETP. The bank has no investment in solar plant project, bio-gas plant project, bio-fertilizer plant project up to year 2012.


Prime Bank has introduced various services which are reducing paper use, fuel consumption etc. Internet Banking, Online Banking, SMS Banking and Phone Banking are such services which are gaining popularity day by day. Besides, the bank has already introduced two specific brands under the Green Banking Products category namely- ALTITUDE and PRIME CASH.

ALTITUDE: This is basically an internet banking facility that provides opportunity-

PRIME CASH: It is a Biometric Smart Card where the thumb impression of a client will work as an authentication code. This smart card is very simple because there is no use of SMS, PIN number or mobile phone. Rather, only the smart card and the clients thumb impression is required. Besides, the smart card is also secured because it is required the thumb impression to authenticate a transaction.


Prime Bank allocated Tk. 15 million per quarter for green marketing, training and capacity building. After introduction of SMS banking, green marketing is gaining momentum. Through push and pull system, the customers are becoming aware of bank‟s new products and initiatives. Employment notices are given on website and


Green Banking Report | 40 online applications are invited now. Kiosk machines installed at different places for the awareness to the customers of the bank‟s product instead of sending paper ads and door to door mail delivery. In addition, CSR activities had contributed to the field of health and green finance as well.

However, during 2012 the bank has allocated a total of Tk. 60 million for Green Marketing but utilized only Tk. 0.03 million up to 2012.


Actually there has been no formal training program conducted by the Prime Bank Limited for giving instructions to the employees regarding Green Banking Policy of the bank. However, the bank has arranged some workshops on Green Banking where only the top executives of the bank from different branches participated.


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The Green Banking Cell of the Prime Bank Limited is working under the Risk Management Division. The RMD consists of 6 members which are also the member of the Green Banking Cell. All the works of the Green Banking Cell are supervised by a Management Committee regarding Green Banking and the decisions of any Green Banking initiatives are taken by the Borad of Directors.

Overall Responsibility

The Management Committee responsible for ensuring the integration of Environmental Risk Management into Credit Risk Management. The operational responsibility is carried out by the Head of Risk Management Unit/Head of Green Banking Cell Mr. Debashis Chakraborti. The Board of Directors allocate and approve a considerable amount of fund in its annual budget for Green Banking.

Internal Reporting

Green Banking Cell (GBC) actively and continuously works with Business Team, HRD, LSSD, CAD, CRM & RMU to improve its environmental management system and environmental qualities of the projects which it finances. It reports to the

Management Committee (MANCOM) on Environmental Issues periodically and takes the initiative to comply with the reporting directions provided by Bangladesh Bank.

External Reporting

Green Banking Practices: GBC reports on the initiatives/activities under the said program to the Department of Off-site Supervision of Bangladesh Bank on quarterly basis. Similarly it submits reports on the subsequent quarters within the next 15 days of


Green Banking Report | 42 the respective quarter end. The GBC also keeps their annual report and websites updated with the disclosures on green banking initiatives/activities.

Environmental Risk Management: GBC has already developed a reporting system with the assistance of Bangladesh Bank, with a view to intimating management, shareholders, and other stakeholders on the use of these Guidelines. This reporting is done on an annual basis in the Annual Report as the Sustainability Report & Green Banking. These are enclosed under the ANEX part of this report.

Besides, there are two specific functions which are also considered under the management framework of Green Banking. These are:

Credit monitoring function

This function is to ensure that environmental risk monitoring shall also be undertaken as a part of monitoring credit risks. Prime Bank Limited has no separate Credit Monitoring Unit and thus CAD/CRM performs the credit monitoring functions and provides the necessary information to the GBC.

Database on Non-Performing Loans (NPLs) due to Environmental Risks

GBC has already established a database of NPLs that are due to environmental reasons. If the borrower has indicated environmental factors as one of the reasons for delays in making repayments, then this is noted in the database. The purpose of this database is to ensure that the Prime Bank Limited streamlines its own institutional knowledge for better decision-making in its future financing.


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The institutional arrangements of the Prime Bank Limited for Green Banking can be viewed from two perspectives.

1) Arrangements for Environmentally Responsible Internal Operations 2) Arrangements for Environmentally Responsible Financing Policies


To foster a more energy or resource efficient internal operations, the GBC of the Prime Bank Limited has completed the formulation of an indicative Green Office Guide which is yet to be approved by the Management Committee.

The principles of the Green Office Guide are formulated in a way so that it will inspire all the employees of the bank to follow those principles. The purpose of the Green Office Guide is to inspire and aware the employees of the bank about how they can maximize their effort to minimize the wastage of resources.

The main Slogan of the Green Office Guide is “REDUCE, REUSE & RECYCLE”. According to the Green Office Guide all the employees of the Prime Bank Limited are instructed on the following issues:

Computers, Printers, Photocopiers

 Switching off all the equipments while not in use

 Program equipments to Hibernate in office times

 All the office equipments must be shut down after office hours

 Making sure that all the employees know how to use the equipments as for not to

waste resources in unlearned hands

 A LCD or Desktop Monitor use energy as of energy needed for printing 800 Laser prints if it is left open for 8 hours without use. So it is very important to shut down all the equipments

 Personal computers must be shut down while not using it

 Laptops should run in battery saving mode. The charger should not be plugged in while running on battery.

 Photocopiers and Printers have high electricity consumption and these equipments are mostly turned on idle. All the employees must know how to use them efficiently and must make sure to turn them off after use.

Air Conditioning

 Use of Fans and natural ventilation when possible

 Use Energy efficient, Eco-friendly Air Conditioners

 Buy Programmed AC which has motion detection on, allowing them to maintain proper room temperature


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 Use Central AC system rather than Split or Box AC as the use of resources will be less.

 Close all windows, doors to maximize the cooling while AC is turned on

 Set Air Conditioning at a Minimum of 24ºC which will keep proper balance of Air

 All the AC will be turned off after 7pm ( End Of Office Hours)

 Switch off all the AC while leaving the room


 Use of natural lights whenever possible. This will save a significant amount of energy and associated greenhouse gas emissions

 Replacing bulbs with energy efficient bulbs. This will not just only reduce costs but also energy consumption.

 Replacing Spotlights with same effect but with more energy saving. Like using 20W halogen light instead of 50W will reduce 60% of energy but serve with same lighting

 Cleaning and maintaining lamps and bulbs will create light efficiency.

 Everyone must know “ Last man to leave the room , turns off the switch” rule not in just lights but in all equipments

 All the lights except very important security lights will be turned off after Office Hours

 The Cleaning stuff must be trained to turn off all the lights and equipments while not necessary

Conservation of Water

 Must conserve Water as the best possible way

 Use of water bottles which can be reusable

 Cleaning Staff must commit to reduce water usage in cleaning procedures.  Install low-flush toilets and water saving faucets in the restrooms.

Purchase of Stationeries

 Office Stationeries should be bought which are needed

 Seek & Inspect for Energy Saving, Environment Sustainable or Eco-friendly

products for purchase before buying

 Seeking for longevity, reusability, refill-ability and recyclability of Products like Printers, Scanners and Photocopiers before Purchase

 Seek products made out of or has elements of Recycled Products  All office elements should be eligible for recycling at the end of its life


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Reuse of Stationeries

 Reuse of Single Sided Paper as notepads or draft copies usable within office

 Reusing Clip-files, Covers , Folders

 Use of Reusable Cups, Crockery & Cutlery within Office

 Encourage the use of Reusable Bottles instead of Single use water Bottles

 Making the Office Journals, Journal Subscription common for all Employees

 Selling used papers to the firms who are recycling the papers

 Use of Email instead of paper works with clients who understand internet business.

 Use telemarketing and email marketing

 Reduce the use of Paper to the best possible way

Single Transportation on the Same Rote

Transportation is another important issue when we thinking about energy or resource consumption. There are a number of employees of every organization who uses the same rote everyday for reaching to the workplace. To reduce the consumption of diesel as well as to reduce the emission of CO2 PBL has encouraged its employees to use a

single vehicle for the transportation purpose on a same rote. Besides, all the vehicles used for banking purposes use CNG which also contributing to the reduction of CO2



Prime Bank Limited has already incorporated the Environmental Risk Management Guidelines of Bangladesh Bank into its Core Risk Management Policy. So when the bank considers any business project for financing purpose the Green Banking Cell under the Risk Management Division performs a detail Environmental Due Diligence analysis with the regular Financial or Legal Risk assessment.

However, Environmental Risk Rating assessment is applicable for the following cases for both new and


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Credit Processing and Approval Process

For a project that is considering to finance and is applicable to the Environmental Risk Assessment, a detailed Environmental Due-Diligence is assessed using the General EDD and the Sector Specific EDD checklist of the Environmental Risk Management Guideline of Bangladesh Bank.

The General EDD: This checklist is provided under the Technical ANNEX Part of the Environmental Risk Management Policy of BB based on which the Prime Bank initially determine the general environmental risk of the project.


Green Banking Report | 47 The Sector Specific EDD: The Technical ANNEX Part of the Environmental Risk Management Policy of BB also represents sector specific due diligence checklist for 10 specific sectors. These are:

1. Agri-business 6. Pulp & Paper 2. Cement 7. Sugar & Distilleries 3. Chemicals (Fertilizers, Pesticides 8. Tannery

and Pharmaceuticals) 9. Textile and Apparel 4. Engineering and Basic Metal 10. Ship Breaking 5. Housing

After completing the Sector Specific EDD the following Matrix is used to give the project a total Environmental Risk Rating (EnvRR).

Now at present the GBC of the Prime Bank Limited has formulated two sector specific policies. One is for the RMG & Textile Industry and Ship Breaking Industry. The reason is that the bank has much exposure in these two sectors. But the bank is considering the other sectors for new financing projects.

However, in general the Prime Bank limited takes a financing decision for those projects having the low or moderate EnvRR. And in case of High EnvRR projects the bank gives importance on personal relation with the borrowers and also gives high importance on the additional documentations in the Environmental Risk Management Policy of BB.


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Green Banking basically considers all the activities and relevant policies of a bank that have a direct or indirect impact on the environment. As a result, identification of the areas that are related or associated with the coverage of Green Banking is a difficult task.

However, in Prime Bank Limited the Green Banking Cell (GBC) is working under the Risk Management Division (RMD). This is logical because the Risk Management Division is responsible for assessing the feasibility as well as fitness of a project.

Here the Green Banking Cell uses the policies related to the Green Banking activities which provide a detail assessment of the projects regarding viability as well as environmental sustainability.

Besides policy formulation, the GBC also provides necessary dictation regarding Green Banking Policy to the Retail Department to consider these issues when making any decision regarding procurement.

The Sales and Marketing Division of PBL is also concerned about the development of Green Banking Products. PBL has been allocating Tk. 15 million per quarter for green marketing, training and capacity building. By this time PBL has introduced various products which are reducing paper use, fuel consumption etc. ALTITUDE (Internet Banking), Online Banking, SMS Banking, Utility Bill Pay service, EasyCash (Mobile banking), Phone Banking and Prime Cash (A Biometric Smart Card) are such products which are gaining popularity day by day.

Besides, the Human Resource Department (HRD) of the Prime Bank Limited is concerned about the initiative of Green Banking. As part of formal initiatives the HR division invites ideas from employees for “Go Green” program at PBL. These ideas are generally evaluated and selected for implementation from MANCOM.


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Prime Bank Limited has made some mentionable progress with regards to Green Banking initiatives by the end of the year 2012. The bank has formulated an indicative Green Banking Policy (as per BB BRPD Circular No. 2), allocated budgets for Green Finance & Climate Risk Fund, introduced some innovative products like ALTITUDE, Prime Cash etc to facilitated online banking, prepared two sector specific policies for RMG & Textile Industry and Ship Breaking Industry etc.

But however, in my view the Green Banking initiatives of Prime Bank Limited has not reached its expected level up to December 31, 2012. The reasons are:

Budget Allocation: Up to December 31, 2012 Prime Bank has allocated a total of BDT. 500 million (BDT. 380 million for Green Finance and BDT. 60 million for both Climate Risk Fund & Marketing activities). But during 2012 the industry highest allocation for Green Banking Activities was BDT. 41700.57 million made by Standard Chartered Bank.

Budget Utilization: Prime Bank has utilized a very small portion of the allocated budget for Climate Risk Fund and Marketing & Capacity Building activities.

Allocation (In Utilization (In millions) millions)

Climate Risk Fund 60.00 0.00

Marketing & Capacity 60.00 0.03 Building

In-House Green Activities: The in-house initiatives of Prime Bank Limited regarding Green Banking are not good. Up to 2012-

Total number of branches of Prime Bank 130 Number of branches powered by solar energy 12 Number of ATMs & SMEs powered by solar energy 5

Besides, there have been no mentionable initiatives taken by the bank to reduce the internal electricity consumption in the Head Office at Motijhil.

Green Finance: Prime Bank Limited has exposure in only two kinds of projects with regards to Green Finance. These are ETP and Projects having ETP. During 2012

Prime Bank has financed a total of BDT. 440.70 million in these two kinds of projects where-

ETP 94.42 million