Corporate Social Responsibility and Islami Bank Bangladesh Limited

Corporate Social Responsibility and Islami Bank Bangladesh Limited

Corporate Social Responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) refers to the concept that “an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the work force and their families as well as the local community and society at large”. CSR is not about philanthropy or charitable work. It is about how companies take responsibility for their actions in the world at large.

The role of business worldwide and specifically in the developed economies has evolved over the last few decades from classical ‘profit maximizing’ approach to a social responsibly approach, where businesses are not only responsible to its stockholders but also to all of its stakeholders in a broader inclusive sense. To address the social problems or the problems of the stakeholders, the business community evolved a new approach in their business strategies named CSR and through CSR enterprises are intent to strike a balance between economic and social goals, where resources are used in a rational manner and social needs are be addressed responsibly. 

CSR in Historical Perspective
CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis. Socially responsibility means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and in rapport-building with stakeholders.  It is relevant in all types of companies and in all sectors of activity, from SMEs to Multinational Enterprises (MNEs). 

Internal dimensions of CSR:
i.              Human resources management
ii.             Health and safety at work
iii.            Adaptation to change and
iv.            Management of environmental impact and natural resources.

External dimensions of CSR:
i.              Local communities
ii.             Business
iii.            Partners
iv.            Suppliers and consumers
v.             Human rights and
vi.            Global environmental concerns.

CSR as Community Development 
CSR in Bangladesh can also contribute a lot to community development. The corporate house can develop the community by creating employment, providing primary education, contribution to infrastructure development like road and high-ways and addressing environmental concerns. This is more relevant for a country like Bangladesh where the government interventions in these fields being augmented by corporate alliance can go a long way in developing the economy, society and environment. 

CSR Applications and Realities in Bangladesh 
CSR concepts and practices in Bangladesh have a long history of philanthropic activities from the time immemorial. These philanthropic activities included donations to different charitable organizations, poor people and religious institutions. Till now, most of the businesses in Bangladesh are family owned and first generation businesses. They are involved in the community development work in the form of charity without having any definite policy regarding the expenses or any concrete motive regarding financial gains in many instances. The discussions on CSR practices in Bangladesh in its modern global terms, are relatively new, but not so for the concept itself. Because, being a part of the global market, it is difficult to ignore CSR standard specifically in the export sector. In general, it is true that in Bangladesh, the status of labor rights practices, environmental management and transparency in corporate governance are not satisfactory, largely due to poor enforcement of existing laws and inadequate pressure from civil society and interest groups like Consumer Forums.  A focus on CSR in Bangladesh would be useful, not only for improving corporate governance, labor rights, work place safety, fair treatment of workers, community development and environment management, but also for industrialization and ensuring global market access. 

Prospects and Future of CSR in Bangladesh 
Bangladesh is a developing country. Because of global competitiveness and demand, the CSR practices and standards are being implemented in Bangladesh. But we are yet go a long way. There are challenges to implement CSR properly in Bangladesh. Ultimately CSR practices should be better practiced in Bangladesh for better and enhanced performance.

Good Governance and CSR in Bangladesh
CSR has been defined in general terms as ‘the obligation of the firm to use its resources in ways to benefit society, through committed participation as a member of society, taking into account the society at large and improving the welfare of society at large independent of direct gains of the company. CSR, as related to the problems of the agricultural input sector of Bangladesh, is used to explain the need of the businesses to be socially responsible and focus on economic, social, legal, ethical and environmental issues. Farmers are being cheated into buying underweight, low quality inputs sometimes at higher prices, which do not benefit yields. The contaminated inputs also cause damage to soil fertility, which eventually results in decreased yields. Lack of effective good governance in Bangladesh has resulted significantly in lack of business ethics and poor CSR culture. In Bangladesh the private sector seems to focus on earning profits in the short term, ignoring the issue of responsible behavior and the desirability of earning the trust of consumers which are important for the long-run success of their operations. The incidence of selling adulterated low quality products at high prices and with underweight and above all, hoarding to reap dishonest profit, all confirm this. In the absence of an effective state intervention in the public interest, private entrepreneurs are less constrained to behave in the public interest and in conformity with CSR.

For Islamic Financial Institutions CSR refers to all activities carried out by an Islamic Financial Institution to fulfill its religious, economic, legal, ethical and discretionary responsibilities as financials intermediaries for individuals and institutions.

To establish Islamic banking through the introduction of welfare oriented banking system Islami Bank Bangladesh Limited created a charitable fund named “Sadaqah Tahbil” (Charity Fund) on July 4, 1983, immediately after the inception. Gradually the volume of its activities increased with the passage of time and the “Sadaqah Tahbil”  was renamed as “Islami Bank Foundation” on May 20, 1991. Continuing of this and to follow the instruction of Bangladesh Bank “Islami Bank Bangladesh Limited” established Corporate Social Affairs Department (CSAD) under Operations Wing on 16th July, 2009.

This report covers topics and indicators that reflect the Bank’s significant economic, environmental and social impacts or that which would substantively influence the assessments and decisions of our key stakeholders i.e. investors, employees, customers, suppliers, communities and environment.
  1. Responsibility to the Investors:
Islami Bank Bangladesh Limited has been discharging it responsibility to safeguard the interest of the shareholders in line with the objectives of the Bank by complying Shariah & Law of the land strictly, building a strong and efficient management and enhancing shareholders value & financial performance. Various announcements on price sensitive information and other disclosures are made through newspaper, website, and other media.

  1. Responsibility to the Employees:          
Islami Bank Bangladesh Limited has succeeded  to develop a group of highly motivated professionals, working for the benefit of the people, based upon accountability, transparency and integrity. The bank always aware of continuous development of knowledge, competencies and attitude of the employees; comfortable and modern working environment as well as justified and competitive compensation packages for them.
ü  “IBBL Recruitment Policy” that maintains transparency in all stages to protect the right of the right of the eligible candidates and the interest of the bank without discriminating gender, race or socio-economic background.
ü  Bank premises are taken with adequate space and interior decorations are made to keep the office environment healthy and work-friendly.
ü  Female employees are also provided with comfortable working environment along with other required facilities.
ü  To develop professional knowledge, skill and attitude of the employees, the bank has got its own training academy ‘Islami Bank Training & Research Academy (IBTRA)’ where training courses are conducted round the year.
ü  IBBL has given highest importance in developing knowledge base of the employes and hence created a learning environment within the organization.
ü  Employees are encouraged to complete ‘Diploma in Islamic Banking’ from IBTRA and ‘Diploma in Banking’ from Institute of Bankers Bangladesh by allocating points for both the diploma in promotion criteria. Besides, each of the employees is given cash incentive for completing diplomas.
ü  Every encouragement is given to develop employees’ aesthetic and sporting talents. IBBL Officers’ Welfare Association organizes annual sports and cultural competition in regional level culminating in national final.
ü  The Bank adheres strictly to the ILO labor practices and standards as well as local labor laws and regulations. Employees are allowed to operate trade union activities in the Bank. In recognition of the need for industrial harmony the Bank has established continuous dialogue with the employees union and officers’ association.

Remuneration and Benefits:
ü  The Bank has developed a complete pay-scale for the employees, which is upgraded and adjusted with the prevailing market after every two/three years.
ü  Apart from regular pay packages, IBBL has got policies for its employees to make their life secured during the superannuation period. Under the policies, ‘Contributory Provident Fund’, ‘Superannuation Fund’ and ‘Gratuity Fund’ have been developed.
ü  To meet-up housing need and to ensure comfortable life, employees are provided with investment at a discounted rate against house building and purchasing household durables under “Staff House Building Investment Scheme (SHBIS)” and “Staff Household Durable Scheme (SHDS)” respectively.
ü  The executives of the Bank are provided with car either from bank management or under “Car Scheme for the Employees of the Bank”.

Caring Employer:
The Bank, as a caring employer stands beside the employees at the events of sadness and happiness in their life.
ü  In instances of critical illness of the employees and their families, financial assistances are extended from Benevolent Fund and Employees Welfare Fund.
ü  Arrangements have been made with some medical centers/hospitals for 30% - 40% discount against medical diagnosis and check-up for the employees.
ü  Families of the deceased employees are given a significant amount of cash instantly after death for burial purpose. Benefits from Superannuation are given to the families of deceased employees.
ü  In instances of parmanent disability, bank take care significantly
ü  The meritorious children of the employees are awarded every year.
ü  Families of the deceased employees are provided Eid Gift.
ü  Sports and Cultural competitions are also conducted for the family members of the employees every year.

Human Rights:
Human rights are upheld at every aspect of the Bank’s operations. The Bank also strives to protect human rights within the Bank’s areas of influence. The Bank does not employ workers under the legal minimum age, prohibits the use of all forms of forced labor, respects employees rights to join, form or not join a labor union, respects the principals of collective bargaining, provides health & safety at work, is non-discriminatory to age, race or sex, prohibit sexual harassment, limits work to standard accepted hours and condemns the use of corporal punishment.

  1. Responsobility To The Customers
Customers are the core of Bank’s existence. To encourage people, from all economic categories for becoming bank’s customer, to ensure improved customer service, to help them run business efficiently, to encourage them in following Islamic principles in their business entities and to make them real partners of the Bank, the Bank takes various initiatives:

Our socially concern Investment schemes:
               i.       The rural poor and the small businessmen are provided with investment facilities without security under ‘Rural Development Scheme (RDS)’ and ‘Small Business Investment Scheme (SBIS)’ respectively.
              ii.       The fixed income earner group are provided with investment to meet-up their housing need and for household durables under Housing Investment Scheme (HIS)/Real Estate Investment Program (REIP) and Household Durable Scheme (HDS) respectively.
             iii.       Unemployed qualified doctors are encouraged to go for self-employment and to serve in the rural and semi-urban areas by providing investment facilities only against their original certificates under “Investment Scheme for the Doctors (ISD)”.
            iv.       The Bank takes special care to the women entrepreneurs by a separate scheme for them namely Women Entrepreneur’s Investment Scheme (WEIS).
             v.       The bank has got other investment schemes namely Micro Industrial Investment Scheme (MIIS) and Agriculture Implements Investment Scheme (AIIS) for development in the micro and rural economy.

Financing in SME Sectors:
SME is considered as the engine of growth in any economy which generates a huge employment relative to big industries. Therefore, SME is essentially required to be flourished in the country like Bangladesh. Keeping this in view, the Bank, from its inception, has been encouraging investment in SMEs. To expedite SME investment, the Bank has opened 30 SME & Agriculture Branches especially in the rural areas of the country.

4. Responsible Customer Services:
a.   IBBL screens all contract forms by the Shariah Supervisory Board to avoid imposition of onerous terms and conditions to the clients, especially whom are in a weaker bargaining position relative to the Bank.
c.   Every branch of the Bank keeps a ‘Complaint Box ‘to facilitate the customers, lodging complaints against services of the Bank or against particular employee(s). A “Customers Complaint Cell” has been formed with the Managing Director as convenor and the Wings & HRD heads as members.
  1. The clients of RDS, those do not have access to safe drinking water and/or sanitary latrine, are provided with Quard (cost-free loan) for installation of hand tube-well and water sealed latrine under RDS Support Program.
  2. To ensure quality and accurate service to the customers, IBBL established online connectivity with all of its branches throughout the country. The Bank introduced own ATM, shared ATM, Web Portal, SMS Banking, Mobile Banking and Spot Cash services.

5. Relationship with the Customers:
IBBL considers the customers as its partners and develops relationship through its employees as well as by organizing various programs in different occasions:
a.   Bank organizes Service week/fortnight in every year.
b.   All the branches organize Iftar Mahfil during the month of Ramadan every year
c.   Every year the Bank distributes New Year’s souvenir - calendar, diary, card etc. among the customers.

6. Responsibility To The Suppliers
Suppliers play a fundamental role in the Bank’s micro environment. As an essential component of overall business function, suppliers regarded as inclusive partners. The Bank develops its relationships with supplier’s organizations on the basis of value and trust.

ü  Ethical Procurement Practices:
The Bank holds ethical conduct as a priority in building suppliers relations. By engaging the employees involved with procurement functions, the Bank strives to maintain the unimpeachable standard of integrity in all business relationship. The Bank is of the view that the ethical behaviour must be promoted and supported by appropriate systems and procedures. Bank expects the highest ethical standard from its suppliers also. In view of the above the Bank follows the following process:
ü  Sustainable Procurement Policy:
IBBL recognises its responsibility to carry out procurement activities in an environmentally and socially responsible manner.

7.  Responsibility To The Community
The Bank is very much conscious regarding its responsibility towards the communities within which it operates:

(1) Education
For promoting of education IBBL takes several regular programs. Like as:
01.      Scholarship to the very poor students secured GPA 5 in SSC & HSC
02.      Medical College, Health Technology Institute, Nursing Training Institute, Technical Institutes
03.      English medium school, Bangla medium school, Girl’s madrasha
04.      Forqania Maqtabs (elementary religious school)
05.        Award to the meritorious students for outstanding results in SSC, HSC and MBA
06.      Mobile Library in Dhaka City.

(2) Health
01.     6(six) fully owned hospitals, 7 (seven) Community Hospitals, 05 (five) Homeopathy
02.     Mobile Eye Camps in rural areas
03.     Circumcision Camps (Sunnat-e-Khatna) for free of cost
04.     Charitable Dispensaries.
(3) Humanitarian and Disaster Relief
(4) Sports, arts & culture
(5) Women empowerment

8. Responsibility To The Environment
The main theme of environmental responsibility is to create ‘No Harm’ to the environment in view to remain it healthy for future generation. IBBL, being a responsible corporation, has taken following initiatives in this regard:

  1. Educating the employees in ‘Green Banking’
  2. Established online connectivity with all the branches
  3. Online Investment proposal
  4. Employees are encouraged to efficient use of energy and thus instructed to avoid unnecessary consumption of electricity by light, fan, air condition and other electrical appliances.
  5. Customers are encouraged to check their balance/statement through internet/ mobile phone/ATM machine without giving paper statement.
  6. Eight Solar Panel of 2720 W capacity is installed in different offices of the Bank.

9. Measures taken with the community:
Due to quick urbanization in the country, forest and agricultural land is becoming squeeze which hampers ecological balance severely. In view to improve ecological harmony, IBBL takes a campaign program of “one man one plant” among the employees and the customers. It observes ‘plantation weekduring the rainy season every year.


The modern concept of Corporate Social Responsibility (CSR) is evolving gradually despite several hindrances. Driving forces behind this evolution is pressure from various stakeholders (Importers, Environmentalists) while slow progress is attributed to lack of Good Governance, absence of strong labor unions, consumer forums and above all lack of understanding by business houses, specifically non-exporting ones, that CSR is not charity but is rather an instrumental PR investment.

Edited by:
Md. Saifur Rahman Chowdhury


1. DYNAMICS OF CORPORATE SOCIAL RESPONSIBILITY – BANGLADESH CONTEXT, Professor (Dr) M Alimullah Miyan, Vice Chancellor & Founder

2. CORPORATE SOCIAL RESPONSIBILITY IN IBBL, (Manager Conference 2011), A.H.M. Latif Uddin Chowdhury, Senior Vice President, Corporate Social Affairs Department, Islami Bank Bangladesh Limited


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