Green Banking relates with the Islamic Banking

Green Banking relates with the Islamic Banking

Green Banking relates with the Islamic Banking: Before going to discussion on the topic we shall have to know the definition/explanation of Green Banking and Banking under Islamic Shariah.

Islami Bank is an institution which will not pay or receive any interest in any form and conducted its all activities in accordance with the Principles of Islamic Shariah.

Sources of Islamic laws are, Quran, Hadith, Isma & Keyas, in a word all are to prevent all types of exploitation and to establish justice in all steps of business operations and work all together for sustainable growth and to eliminate all types of disparity from the society.

 

Characteristics of Islami Bank:

  • It is a commercial Bank/Institution.
  • Where there is no existence of interest.
  • It is guided and operated under Islamic Shariah Principle.
  • Islami Bank deals with the goods.
  • In an Islami Bank money is only the mode of exchange of goods.
  • It ensures utilization of money for Halal & Productive sectors towards growth of the economy in Hahal way.
  • Islami Bank provides Zakat on asset which will act as CSR activities.

 

Green Banking means:

Green Banking means maximum utilization of natural resources (God gifted resources) and minimum dependency on artificial resources which to be produced by polluting environment and which ultimately will affect environment and mankind.

Green Banking and Banking under Islamic Shariah is not contrary to each others rather are complimentary and supplementary

About Green Banking

The term “Green Banking” generally refers to baking practices that foster environmentally responsible financing practices and environmentally sustainable internal processes minimizing Green House Gas (GHG) emissions.

Green Banking thus involves a two pronged approach:

Firstly, green baking focuses on the green transformation of internal operations of all banks. It means all the banks should adopt appropriate ways of utilizing renewable energy, automation and other measures to minimize carbon footprint from banking activities.

Secondly, all banks should adopt environmentally responsible financing; weighing up environmental risks of projects before making financing decisions; and in particular supporting and fostering growth of upcoming ‘green’ initiatives and projects

In house green activities include:

  • Reduce dependency on grid power by shifting to use of solar power and other renewable energy sources to the maximum feasible extent.
  • Follow green architecture while constructing bank offices.
  • Use energy saving technologies such as LED(Light Emitting Diods),CFL(Compact Fluorescent Lamp) etc.
  • Use energy efficient digital devices.
  • Reduce use of paper by adoption of online automated work practices.
  • Conduct energy audit regularly to monitor carbon footprint.

Green activities in financing include:

  • Carry out environmental risk assessment of projects, financing only those that meet environmental safeguards/ sustainability guidelines.
  • Provide green loan to promote solar energy, biogas plants, effluent treatment plants and other energy saving output practices like Hybrid Hoffman Kilns in brick fields.
  • Develop green banking products for clients.
  • Promote growth of mobile banking and online banking.
  • Include environmental sustainability support initiatives in corporate social responsibility (CSR) programs, inter alia including financial support to climate risk fund.

BB’s initiatives to implement Green Banking:

  • As part of central bank automation, Bangladesh Automated Clearing House (BACH), Credit Information Bureau online, Enterprise
  • Resources Planning (ERP), Enterprise Data Warehouse (EDW), e-tendering, and e-recruitment have come into reality. Bangladesh Bank declared reward for Green Banking complied Banks/FIs.
  • Awarding credit points for green banking initiatives in the assessment of management component of CAMELS rating for a bank.
  • Publicizing names of top ten performers in green banking at BB website.
  • Taking into account green banking performance while considering requests for new bank branch licenses.
  • Status of Green Finance under BB’s Refinance Scheme

Bangladesh Bank refinance scheme for promoting of green projects

As of October 2012 Tak. 838.4 million out of Taka 2.0 billion revolving fund has already been allocated to the following green projects:

Category Amount (in million Taka)
Solar irrigation pump 23.9
Solar home system 87.8
Biogas plant 262.7
Effluent Treatment Pant (ETP) 90.4
Hybrid Hoffman Kiln (HHK) 124.8
Solar PV module assembling plant 248.8

 

Bangladesh Bank instructed all Banks and FIs to implement Green Banking guideline under following 3 phases:

Phase-I                to be implemented within                                                           December 31, 2011

Phase-II              to be implemented within                                                           December 31, 2012

Phase-III             to be implemented within                                                           December 31, 2013

 

  Phase-I

  • Policy formulation & Governance
  • Incorporation of Environmental Risk in CRM
  • Initiating in-house Environment Management
  • Introducing Green Finance
  • Creation of Climate Risk Fund
  • Introducing Green Banking
  • Online Banking
  • Supporting Employee Training, Consumer awareness & Green Event
  • Reporting Green Banking Practices

 

Phase-II

  • Sector Specific Environmental Policies
  • Green Strategic Planning
  • Setting up Green Branches
  • Improved in-house Environment Management
  • Formulation of Bank Specific Environmental Risk Management Plan & Guidelines
  • Rigorous Programs to Educate Clients
  • Disclosure & Reporting of Green Banking Activities

 

Phase-III

  • Designing & Introducing Innovative Products
  • Reporting in Standard Format with External Verification
  • Designing & Introducing Innovative Products
  • Reporting in Standard Format with External Verification

 

 Banks ‘ln-house Green Activities

  • Common use of table stationeries instead of individual use.
  • Use of paper on both sides for internal consumption,
  • Introduction of e-statement for customers instead of paper statements.
  • Use of online communication in the best possible manner,
  • Using more daylight instead of electric lights and proper ventilation in lieu of using air conditioning.
  • Using energy saving bulbs.
  • Use of Eco Savvy font -for printing light impression on both sides of paper.
  • Setting defaults like “Thinking twice before printing,”, “Printing only it really needs”, “Please check your environmental responsibility” etc. in email correspondences.
  • Video/Audio conference in lieu of physical travel.
  • Conversion of bank’s vehicles into CNG and use of energy efficient electronic equipments.
  • Efficient use of printer cartridges, photocopy toner, office stationary, etc.
  • Sharing electronic files, voice mail and e-mail instead of paper memos.

 

 Green Activities at a Glance

  • Green Banking Activities at a Glance
  • 45 banks have formulated policy for green banking
  • 46 banks have formed a Green Banking Unit
  • 41 banks have introduced a Green Office Guide
  • EnvRR has been done for 13,779 projects
  • 13,833 rated projects have been financed
  • 13,07,479,64 million taka has been disbursed
  • 212 Branches and 150 SME unit /ATM are powered by solar energy
  • 37 banks are fully automated
  • 3226 branches have been facilitated with online coverage
  • 8 banks have utilized Taka 9,74 million from Climate Change Risk Fund (during July-September, 2012)
  • Banks have financed Taka 3273.69 million as Green Finance other than projects. having, ETP (during January-September, 2012)
  • At least two banks have created two trust funds for rewarding individuals and corporate for their outstanding contributions towards raising consciousness and addressing issues related to climate change

 Green Banking Slogans of Banks

  • Save paper, save trees.
  • Conserve energy, conserve natural resources.
  • Pay your bills online.
  • Turn off the tap when not needed.
  • Always use a cloth bag, .
  • Reduce, reuse and recycle.
  • Digitize yourself.
  • Think before you press the button.
  • Everything has two sides.
  • Be paperless- kick the habit.
  • Use car pools to go to work.
  • Unplug electronic devices while not in use.

All are for saving the environment from probable pollution and keep the environment hazard free and safe residence for next generation.

 Bangladesh Government’s Initiatives:

  • Government of Bangladesh passed one act and one Rule for conservation of Environment, namely:
  • ECA (The Environment Conservation Act-1995) &
  • ECR (The Environment Conservation Rules 1997)
  • “conservation of environment” means improvement of the qualitative and quantitative characteristics of different components of environment as well as prevention of degradation of those components.
  • “environment” means the inter-relationship existing between water, air, soil and physical property and their relationship with human beings, other animals, plants and micro-organisms.
  • “Pollution” means the contamination or alteration of the physical, chemical or biological properties of air, water or soil, including change in their temperature, taste, odor, density, or any other characteristics, or such other activity which, by way of discharging any liquid, gaseous, solid, radioactive or other substances into air, water or soil or any component of the environment, destroys or causes injury or harm to public health or to domestic, commercial, industrial, agricultural, recreational or other useful activity, or which by such discharge destroys or causes injury or harm to air, water, soil, livestock, wild animal, bird, fish, plant or other forms of Life.

For issuing Environmental Clearance Certificate total industrial/business activities are divided in to following 4 categories : Green (free from prolusion), Orange-A (Slightly polluted), Orange-B (Largely polluted) and Red (Fully polluted).

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Green Banking relates with the Islamic Banking

Green Banking relates with the Islamic Banking

Green Banking relates with the Islamic Banking