Banks failing to comply with CSR distribution rules

Banks in the country are failing to comply with the regulations regarding expenditure in the Corporate Social Responsibility (CSR) sector. According to Bangladesh Bank's rules, at least 30% of CSR expenditure should be allocated to the education sector, 30% to the health sector, 20% to environment and climate change adaptation, and the remaining 20% to other sectors. However, the reality is the opposite.

In the January–June period of 2025, 61 scheduled banks collectively spent 55% of their CSR funds, approximately 83 crore Taka, in the 'other' category. In contrast, 22.75% or 34.25 crore Taka was spent on education, 18.67% or 28.12 crore Taka on health, and a mere 3.46% or 5.21 crore Taka on environment and climate change adaptation. This means banks spent significantly less on the three primary sectors than the mandated allocations.

Furthermore, the overall CSR expenditure by banks has decreased in the first six months of the current year (2025). During this period, banks' CSR spending stood at only 150.56 crore Taka, the lowest in the last decade. These details have emerged from the latest statistics of Bangladesh Bank.

Concerned stakeholders say the widespread lack of transparency in the sector-wise distribution of CSR expenditure and the flouting of directives are casting doubt on the entire banking sector.

The latest Bangladesh Bank statistics reveal that 13 banks spent nothing on CSR in the first six months of 2025. This includes state-owned banks. The banks are: Janata Bank, Agrani Bank, Basic Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, National Bank, Padma Bank, Community Bank, SBCSAC, Union Bank, Global Islamic Bank, and National Bank of Pakistan.

The expenditure target for the CSR sector in 2025 has been set at 538 crore Taka, which is 3.14% of the net profit from 2024. According to Bangladesh Bank's directive, banks can spend up to a maximum of 1% of their net profit on CSR. Within this, allocating 30% to education, 30% to health, and 20% to environment and climate is mandatory. The remaining 20% is to be spent on income generation, disaster management, infrastructure development, sports and culture, and other sectors.

Statistics show that CSR expenditure hasn't been this low in the last ten years. In the first six months of 2015, 254 crore Taka was spent, whereas the current period's expenditure is 104 crore Taka less than that. Banks' CSR spending was 298 crore Taka in July–December 2021. It increased to 514 crore in the same period of 2022. However, it decreased the following year (2023)—309 crore in the first six months and 307 crore in the last six months. In the first six months of the current year, spending has plummeted to just 150 crore Taka.

According to bankers, a key reason for the decline in CSR spending is the political change. They claim that during the time of the political government, various quarters put pressure on banks to increase CSR spending. A large portion of the expenditure was directed to fulfill the demands of political individuals, public representatives, and influential circles in the name of education, health, or donations.

After the political instability in July 2024 and the change of government in August, that pressure has subsided. Consequently, banks are now spending based on their own discretion, which is why expenditures have significantly decreased compared to before.

An officer of NRBC Bank said that directives for spending funds in the CSR sector used to come from outside the bank at one point. This severely disrupted the sector-wise distribution. That pressure may not have completely disappeared but has lessened. If this trend continues, spending in this sector will be for the actual beneficiaries.

Economists said that not only has CSR spending decreased, but banks are also not following the expenditure rules. As sufficient allocations are not going to sectors like education, health, and environment, this fund is failing to have the desired impact on social development. They believe that transparency, accountability, and the audit system for CSR fund expenditure need to be strengthened further.

An economist stated that if CSR expenditure does not go to the right sectors, it does not bring any positive change to society. Instead, it merely becomes a formality to fulfill obligations.

Officials at Bangladesh Bank said that besides lower net profits, a major reason for the decreased expenditure is the reduction in the mandatory contributions that previously had to be made to the Prime Minister's Relief Fund and Education Fund.