Banks failing to comply with CSR distribution rules

Banks in Bangladesh are failing to comply with regulatory guidelines in distributing funds under their Corporate Social Responsibility (CSR) programs, with the majority of spending diverted to unspecified sectors, a recent Bangladesh Bank report reveals.

Between January and June 2025, 61 scheduled banks spent 55% of their total CSR expenditure—approximately Tk 83 crore—on "other" sectors, disregarding mandatory allocations for education, healthcare, and environmental causes.

As per central bank directives, banks are required to allocate 30% of CSR funds to education, 30% to health, and 20% to environmental protection and climate change. However, actual spending fell far short: education received only 22.75% (Tk 34.25 crore), healthcare 18.67% (Tk 28.12 crore), and environment-related sectors just 3.46% (Tk 5.21 crore).

Moreover, total CSR spending in the first half of 2025 dropped to Tk 150.56 crore—marking the lowest amount in the past decade. In comparison, banks spent Tk 254 crore in the first half of 2015 and Tk 514 crore in the second half of 2022.

The report also shows that 13 banks—including state-owned institutions such as Janata, Agrani, BASIC, and Bangladesh Krishi Bank—did not spend a single taka on CSR during this period.

Bangladesh Bank had set a CSR expenditure target of Tk 538 crore for 2025, equivalent to 3.14% of the banking sector’s net profit in 2024. While banks are permitted to spend up to 1% of their net profit on CSR, adherence to sector-wise allocation remains mandatory.

Experts and economists have expressed concern over the lack of transparency and accountability in CSR disbursements. “CSR spending must be targeted toward education, healthcare, and environmental issues to create real social impact,” one economist stated, warning that misdirected spending risks reducing CSR to a mere formality.

Bankers point to recent political changes as a factor behind the declining trend. They claim that under the previous government, banks were under pressure to channel CSR funds toward politically driven projects. With the change in government in August 2024 and reduced political interference, banks are now exercising greater discretion in CSR spending.

An NRBC Bank official noted that while external pressure has not disappeared entirely, it has lessened significantly, paving the way for more responsible and effective use of CSR funds.

Bangladesh Bank officials added that reduced mandatory contributions to the Prime Minister’s Relief and Education Funds, along with declining net profits, have also contributed to the overall fall in CSR expenditure.