Bangladesh Bank has asked banks to send detailed information on their corporate social responsibility activities to check any misuse of funds and make a comprehensive guideline.
The move comes after questions were raised about the legitimacy of the beneficiaries of such funds in some cases.
For instance, the board of a government bank in a single meeting approved Tk 20 crore for CSR spending, while a private bank spent a considerable sum in the name of CSR to get membership to an upscale club.
Furthermore, many are alleging that militant funding is taking place under the guise of CSR.
In a bid to get to the bottom of the matter, the government formed the anti-militancy taskforce headed by Industries Minister Amir Hossain Amu, which has decided to monitor the spending by scheduled banks under their CSR activities.
The central bank in the first week of this month sent a letter to all commercial banks asking them to forward all information regarding their CSR spending between January and June, amounting to Tk 5 lakh and above.
It also asked for copies of the applications of the beneficiaries and board approval of the expenditure.
BB, however, asked four state-owned banks -- Janata, Agrani, Rupali and Bangladesh Development Bank -- to send the same information but for the last five years. The four banks were recently slapped with a temporary ban on their CSR expenditure.
A finance ministry official said they have observed that CSR spending in the four banks, especially Janata, has gone up significantly as the tenures of their chairmen were nearing expiry.
In 2013, the four banks spent about Tk 50 crore in total on CSR, with Janata alone accounting for Tk 42.68 crore. Janata's CSR allocation this year is Tk 35 crore; in the first eight months, the bank's board approved Tk 28 crore.
M Aslam Alam, secretary of the finance ministry's bank and financial institutions division, told The Daily Star the central bank has taken an initiative to formulate a comprehensive guideline for CSR spending, which saw an increase in recent times owing to encouragement by BB Governor Atiur Rahman for social good.
Presently, there are various directives on an ad-hoc basis following which the banks do their CSR spending. The BB by reviewing all these ad-hoc directives would frame a complete policy guideline, he said.
Last year, banks spent around Tk 442 crore on CSR activities, up 45.12 percent year-on-year. Some Tk 138.58 crore was spent on humanitarian and disaster relief, the highest, followed by education at Tk 129.52 crore.
source: The Financial Express