Green Banking: Unknown to People of Bangladesh

Green Banking: Unknown

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Green Banking: Unknown to People

Ahnaf Sadat Ahmed

Student of Bachelor of Business Administration

North South University

Author Note

This research was done for the advanced composition (ENG 105) course of North South

University

Correspondence concerning the article should be address to Department of English,

North South University, Plot#15, Block# B, Bashundhara, Dhaka-1229

Contact: [email protected]

mailto:[email protected]


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ACKNOWLEDGEMENT

First and foremost, I would like to remember Allah for blessing me to complete the paper. I

would like to thank my parents for their constant support. Thanks to Mahjabeen Hussain, my

course coordinator, who have guided me throughout the research and without her this would

have not possible. Thanks to Ayesa Siddiqua Lija, for her help in the paper. My special thanks go

to my neighbor Md. Tanvir Ahmed Kalince for always helping me in the paper. All my friends

and family members deserve special thanks. Finally, my deepest appreciation to all the people

who have participated in the survey, without them my research would have been boneless.


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ABSTRACT

To make this world a better living place, all the parties including the banks must fight from their

sides against global warming. For this, green banking activities are initiated by banks. They are

financing environment friendly projects and promoting green banking services to their

customers. To attain sustainable green economy, they are helping Bangladesh. The main purpose

this study is to find out to what extent people are knowledgeable about green banking and the

impact of it in their lives. Also, this study will find out the most beneficial products of green

banking. From both the primary and secondary data analysis, it is found that people showed

positive attitude towards green banking although they do not have a clear view of green banking.

It is also found that, ATM booths and Renewable Energy Plant is the most beneficial product of

green banking services and green financing accordingly. It can be concluded that in Bangladesh

banks should conduct green banking activities more. This will create sustainable growth for them

in the long run. This will result in sustainable green economy in our country. If all parties of the

world including banks act responsibly, we can make this world a better place to live for our next

generation.


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INTRODUCTION

Global warming is the increase of greenhouse gases emissions produced by human activities.

The rapid change in climate due to global warming will be too great to allow many eco systems

to suitably adapt. Global warming is responsible for many disasters which are very threatening

for the existence of people. So, in order to protect the environment human society must act

quickly. Bangladesh is one of the most vulnerable countries in the world. As people have no

control over the happening of natural disasters, they only can reduce the probability to happen

these disasters. Banks conduct business through money. At a glance, there activities are

environment friendly as they don’t deal with environment. But, the projects, funded by them may

not be environment friendly. So, banks have an external impact on environment. As a part of the

society, banks also have responsibilities to protect the environment. Banks main purpose is the

development of economy. So, they have to ensure the economic development through

environmental protection. This practice of banks can be termed as “green banking”. Green

banking is all about using resources in favor of environment. Green banking was evolved in

western countries but now it became popular all around the world. It includes: 1) Green finance:

financing in resource-efficient and low carbon industries. 2) Green banking services: Include

ATM booths, SMS banking, Credit Card, and Debit Card. 3) In house Green banking activities:

Includes paper less work, electronic transaction system and renewable energy powered branches

etc. According to Dr. Bahl (2012) major benefits of green banking are listed here: 1) Avoids

paper work, 2) Creating awareness to business people about environment, 3) Sanctioning loans at

comparatively lesser rates, 4) Environmental standards for lending. Green banking aims to

reduce external carbon emission and internal carbon footprint. Green banking can be performed

in many forms. It includes use of online banking instead of branch banking, paying bills online,

opening up CDs and money market accounts at online banks, instead of large multi-branch bank,

Mobile Banking, SMS Banking, ATM, Remote deposit, Waste Management, Roof Gardening,

and Green Financing etc. The main objective of the study is to find out people’s knowledge


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about green banking, specially the student’s attitude towards green banking and the impact of

green banking in their lives. Also in this paper, another attempt has been made to find out the

most beneficial product of green financing and green banking services.

HYPOTHESIS

Green banking is necessary for sustainable environment. From my research, I expect to find out

to what extent people are knowledgeable about green banking and the impact of it in their lives.

Green banking has practiced from 2011, but there are some reasons for its unpopularity to

people. I want to find the reasons and how to overcome the problem. I also want to find out the

most beneficial product of green financing and green banking services.

I believe people are not at all conscious about what green banking is and its opportunities. I

hope to find out the reasons of so.

RESEARCH QUESTIONS

My research will address the following research questions:

What is Green banking?

What are the advantages of green banking?

How common people be benefited from green banking?

Which is the most beneficial product of green banking?

How to make the concept popular among common public?

METHODLOGY

The research is based on two parts.

1) Primary Data Analysis

2) Secondary Data Analysis

The primary data is based on the method called “Small-scale Questionnaire based Survey”.


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The method had applied because:

- Sample size was small (n=25),

- Time was not convenient to conduct a large-scale research,

- This method is the simplest way of study,

- For better analysis quantitative data was required.

Here, “Representative sampling” was applied, where samples were divided into two major

groups.

- Students (15 people), includes only University going male and female students,

- Others (10 people), includes Service-holders, Business persons and House wives.

Secondary data is based on the publications, articles and journals published around the world.

PRIMARY DATA PRESENTATION AND ANALYSIS

Bank accounts hold by people:

Looking at the chart, it can be observed that, all the other people have a bank account (100%)

where only 53% students have a bank account. But, student bank accounts are increasing in

0

2

4

6

8

10

12

Student Other

Bank Account

Yes

No


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number day by day. This may be because of increasing technology and “Smart Next

Generation”.

It can be concluded from the above chart that, now a day’s many of the bank account holders

keep them up to date through electronic system, like computer. This is helping to reduce the

paper printing. Banks can charge some value for the hard copy of bank statement to popularize

digital system.

People’s knowledge about Green banking:

0 2 4 6

>3months

3months-1year

<1year

Electronic copy

Copy of Bank Statement

Copy of Bank Statement

Green Banking Yes No

Students 11 4

Others 8 2

Name any Environment Friendly Project Funded by Banks


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73% students had heard the name of “Green banking” before where 80% others had heard it. But,

it is quite interesting that, only one of the total samples was able to recall a name of any

environment friendly project funded by banks. This is the scenario of green banking. Many

people have heard it but majority don’t know what actually green banking committed to.

It was found that, people were very much interested towards the topic. But, at the same time,

many argued that green banking would not be successful. Most of the cases, their assumption

was, banks are for money and money is printed through paper but green banking aims for paper

reduction. So, it is quite contradicting context.

Advertisement of Green banking products:

Green Banking Commercials

Yes

No

Yes 1

No 24


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Only 2 people agreed to that green banking products are advertised frequently. The rest were

against the notion. In Bangladesh, where green banking is still unpopular banks should design

innovative green banking products and advertise those to let the people know and make the

concept popular.

The most beneficial product: Green Banking Services-

0

1

2

3

4

5

6

7

8

ATM Booths SMS Banking OnlineTransaction

System

None

Beneficial Product (Green Banking)

Students

Others


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The chart clearly indicates that, ATM booths are the most popular and beneficial green banking

products. Banks have 4735 ATM booths in Bangladesh. 214 branches of 26 banks are powered

by solar energy. 160 SME/ATM units of 9 banks are powered by solar energy. Still the banking

sector has a long way to go at green banking activities. People consider ATM booths because it

is convenient to use and saves time. Students prefer ATM booths more because in this age of

information technology the younger generation wants to do things through the easiest possible

means. They want to adapt new technologies as well. Online transaction system is also growing

popularities (28%). Students prefer green banking products more. So, the banks should forward

with new green banking products. It will be a great opportunity for the banks to expand in this

field. SMS banking is also popular. People are using green banking services without knowing it.

But, here Bangladesh doesn’t have still good logistics support to prevent fraud. Almost 16%

think green banking products are useless. This may be because they are not aware about the

benefits. So, first of all, banks need to advertise or make the concept popular than go for

expanding business.

The most beneficial product: Green Financing-


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Banks in the name of green financing invest in environment friendly projects, weighting up

environmental risks of the project before making financing decisions and particularly supporting

and fostering growth of upcoming “green” initiatives and projects. Here, samples think Bio-gas

plant and Renewable Energy Plant is the most beneficial product. Students (80%) think Bio-gas

plant and Renewable Energy Plant because of too much electricity failure in Bangladesh. Where,

others (50%) also go for Renewable Energy Plant. People are very much exhausted due to lack

of power supply. So, if the banks reduce the interest rate to some extent and provide loans to the

energy service providers in a flexible way that will help to increase the power production. It’ll

not decrease banks profitability. Banks here adjust the interest rate with their corporate social

responsibilities. Only 12% people consider green financing as useless. This is because of their

unconsciousness about the benefits from this field. It can be concluded from the graph that banks

may request for proposals from their potential energy manufacturer and offer them to lend at a

flexible means to go for these energy producing environment friendly projects.

Investing in environment friendly project at a flexible interest plan will make the bank profitable:

0

1

2

3

4

5

6

7

EffluentTreatment Plant

Bio-gas plant RenewableEnergy Plant

None

Beneficial Product (Green Financing)

Students

Others


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Investing in environment friendly project at a flexible interest

plan will make the bank profitable

Results

Agree 22

Disagree 3

People think green financing will make the banks profitable. It is a good sign for the banks. The

main theme here is that, banks do not have to loss anything. Banks make the interest rate flexible

don’t indicate that they are losing. They adjust this sacrificing interest rate with their CSR fund.

Moreover, green banking reduces paper consumption cost and stationary cost, increases

automation and utilizes renewable energy. So banks can save costs from here.

People know the green banking term but they do not have any clear idea. They think it will be

beneficial for them but they do not know the process. Again, people use green banking services

but they do not know they are using green banking services. So, if the banks want to popularize

the concept than first they should make popular to people. People have to understand that green

banking is not only beneficial for the individual but also for the society. This will help to expand

green banking.

SECONDARY DATA ANALYSIS

Increasing amount of greenhouse gas emissions leads to increase in global warming. This

contributes to adverse change in the environment. As corporate side is a part of the society and

being a member of the corporate side, banks have started to conduct activities to save the

environment, which is known as green banking activities.


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Islam and Das (2013) have conducted a study highlighting the mobile banking, online banking,

green financing, and guidelines for green banking practices as well as green banking unit. They

have found that though green banking is a new term in Bangladesh, it is a mature issue in

developed countries. So banks should consider the environmental issues of the country as a

social responsible person not only to face the impact of globalization but also to face

competition.

According to BANGLADESH BANK (2011), policy guidelines for green banking stated that

every bank must follow to conduct the green banking activities which are segregated into 3

phases. In phases-I, bank must formulate green banking policy showing general commitment on

environment through in-house performance within December 31, 2011 which will be completed

in nine stages. Incorporation of Environmental Risk in Core Risk Management stage, banks must

incorporate Environmental and Climate Change Risk as part of the credit risk according to

guidelines on Environmental Risk Management (ERM) and in the third stage, initiating In-house

environment management; banks will circulate a “green office guide”. Bank shall formulate and

adopt broad environmental or Green Banking policy and strategies approved by their Board of

Directors and keep a considerable amount for green banking in its annual budget. Banks should

entitle a branch as green branch with a special logo if it uses natural light, uses renewable

energy, uses energy saving bulbs and other equipments, requires reduced water and electricity

use, uses recycled water etc. Banks should publish independent Green Banking and

Sustainability reports showing past performances, current activities, and future initiatives.

Addressing the whole eco-system through environment friendly initiatives and introducing

innovative products and standard environmental reporting with external verification must be

done. Bank must publish independent Green Annual Report.

Bahl (2012) urges banks to promote different types of environment friendly products which will

ensure the protection of our environment and the profitability of banks in India. The author

talked about the importance of green banking, green banking products and various banks activity

regarding adopting green banking in India. This is a helpful source for getting an overview of

green banking.


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Mani (2011) indicated that as Socially Responsible Corporate Citizens (SRCC), banks have a

major role to play and responsibility in enhancement of governmental efforts towards substantial

reduction in carbon emission and building a green economy. Banks should practice and take

initiative of green banking not only for the environment but also for sustainable economic

development.

Researchers conducted many researches regarding green banking, some of them have been

conducted to demonstrate the green banking practice of a country, some to discuss the reasons

why the banks should perform green banking, some contained the legal prospect and some

advised to adopt new green banking policy. But no researches had been done to find the impact

of green banking in people’s life and the most beneficial product of green banking. This

drawback has persuaded me to conduct this research. I believe this will be helpful for the readers.

This study will also be important to formulate policy recommendation of green banking in

Bangladesh.

LIMITATIONS

This is a small scale research conducted within a short time. There are some drawbacks in this

research. The sample size was only 25, too little to draw a conclusion regarding the result in

general. Response rate was low. Some samples might not take the survey seriously. There were

to research conducted in this topic, so analyzing secondary data might not be fully accurate. If I

had more time I would take a large a sample size and take interviews of executives of banks.

FINDINGS

Green banking is increasing popularity. Most of the samples show a positive attitude towards it.

For the sustainable development green banking is essential, ATM booths and cards are the most

beneficial products of green banking services. Renewable Energy Plant is the most beneficial

product of green financing. People agreed that Green banking increases banks profitability. But

the problem is people still are not aware of this concept. Confusion is working regarding


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definition and features of green banking to the samples. Moreover, people hardly see any

advertisement of green banks. Banks can advertise frequently to clear this.

CONCLUSION AND POLICY IMPLICATIONS

From our analytical results it can be concluded that banks must take new initiative and promote

different green banking products. Student banking can be mixed with green banking. Banks can

reduce the interest lending rate to encourage students to invest in the green banking products.

This will create entrepreneurs at the same time green projects. In order to popularize this

concept, frequent advertisement is must. Greene financing projects will reduce the global

warming threat to some extent. As ATM booths are popular, they all should be Green ATM’s

meaning all powered by renewable energy sources. Financing in Renewable energy plant should

be emphasized rather than other conventional energy plant. This will increase the electricity

production of Bangladesh. They must adopt different environment friendly policies. They should

take different effective green banking strategies to make green banking successful. Green

banking will ensure the efficient use of resources of the country which will ensure energy

conscious world. Banks must consider green banking as a necessity rather than desirability. They

can make themselves bank of third generation through conducting green banking activities.

Banks should conduct green banking activities more to increase their profitability. This will

create sustainable growth for them in the long run. This will result in sustainable green economy

in our country. If all parties of the world including banks act responsibly, we can make this

world a better place to live for our next generation.


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REFERENCES

Bahl, Dr. S. (2012). "Green Banking: The New Strategic Imperative", Asian Journal of Research

in Business, Economics and Management, 2(2), 176-185.

Bahl, Dr. S. (2012). “The role of Green Banking in Sustainable Growth”, International Journal

of Marketing, Financial Services and Management, 1(2), 27-35

BANGLADESH BANK, (2011). Policy Guidelines for Green Banking, Dhaka, Bangladesh.

Islam, Md. S., & Prahallad, C. D., (2013). "Green Banking practices in Bangladesh", Journal of

Business and Management, 8(3), 39-44


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APPENDIX A


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APPENDIX B


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APPENDIX C

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Green Banking: Unknown to People of Bangladesh

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