The central bank issued Monday guidelines on Corporate Social Responsibility (CSR), strictly prohibiting the financing of militancy and terrorist activities.
"Every bank/financial institution/its foundation shall exercise utmost care in ensuring that the CSR support allocations do not end up aiding or abetting the financing of militancy and terrorism," the Bangladesh Bank (BB) said in its directive.
It also said any suspected event of such abuse of CSR assistance must be reported to law-enforcement authorities, stopping the CSR assistance forthwith.
Failure to do so will attract penal proceedings under the Anti- Money Laundering (AML) and the Combating Financing of Terrorism (CFT) laws and regulations, the regulator cautioned.
The banks and non-banking financial institutions (NBFIs) are allowed to expend around 30 per cent and 20 per cent of total CSR funds to facilitate education and healthcare supports respectively.
Education-and job-focused vocational training being crucial in widening advancement opportunities for the underprivileged population segments, around 30 per cent of total CSR expenditure should be for scholarships/stipends for students from low-income families in reputed academic and vocational training institutions, according to the guidelines.
"Selection processes for scholarships and stipends should elicit enough information to preclude applicants from drawing benefits from multiple banks/financial institution sources," it noted.
The BB also said preventive and curative healthcare-support assistance for underprivileged population segments comes next in priority. Around 20 per cent of total CSR expenditure allocation in this area would be appropriate.
The remainder of direct budgetary CSR expenditure allocations should be used in such other areas as emergency disaster relief, promoting adoption of environmentally sustainable output practices and lifestyles, promoting artistic, cultural, literary, sports and recreational facilities for the underprivileged, upgrading facilities and lifesaving equipment in emergency rescue services like the fire brigades etc, infrastructure improvement for disadvantaged communities in remote far-flung areas and so forth.
As per the guidelines, indirect costs associated with promotion of inclusive financing for productive SME initiatives in agriculture, manufacturing and services, and for environmentally beneficial 'green' projects are partly mitigated by such policy supports as concessional refinance lines.
The remainder has to be viewed as investment costs of expanding into newer client bases.
Under the guidelines, the banks and NBFIs are not allowed to take fresh CSR grogrammes if they fail to pocket net profit. But the previous commitments will continue.
"A bank/financial institution with no post-tax net-profit surplus may postpone making fresh CSR programme expenditure commitments but should continue honouring previous commitments (like educational scholarship for a student's educational course period etc)," the directive says.
The dedicated CSR unit/foundation will propose budgetary allocations for CSR programmes annually for approval by the board of the bank/financial institution.
The board will then approve allocations by appropriations from annual post-tax net profits.
"The proposals for board approval must scrupulously avoid any allocation in favour of any entity directly or indirectly connected with directors, senior management members of the bank/financial institution or with the trustees of its CSR foundation," the BB warned.
In the detailed guidelines governing the CSR spending, the central bank also said every bank/financial institution shall be responsible for the monitoring of proper utilisation of the CSR support assistances for the intended purposes.
"We'll also monitor and supervise the overall CSR activities closely to ensure use of the funds," a BB official said explaining the actions in this regard.
He also said the central bank specified the allocations on education and health sectors through issuing the CSR guidelines.
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