The government has put corporate social responsibility (CSR) activities of four state-owned commercial banks (SoCBs) on hold.
The suspension came as capital adequacy and overall provisioning of the banks have come under pressure following spending of large amount of funds for the purpose.
The Ministry of Finance (MoF) issued the order Thursday asking the chief executive officers and managing directors of Janata Bank Ltd, Agrani Bank Ltd, Rupali Bank Ltd and Bangladesh Development Bank Ltd to stop their CSR activities.
"It came to our notice that the boards of directors of some SoCBs have been spending a significant amount of money in the name of CSR activities. It is casting a negative impact on capital adequacy and overall provisioning of the banks," the directive said asking for suspension of spending money on CSR activities.
In another directive, the MoF asked Janata Bank Ltd to put on hold the amount of money allocated in the name of CSR in a board meeting held on August 25 last.
"We came to know that the board meeting on August 25 allocated a large amount of money for CSR activities. Please hold up the decision and send detailed information to this ministry regarding the money allocation process," the order, signed by deputy secretary of Banks and Financial Institutions Division (BFID) Rizwanul Huda, stated.
When contacted, secretary to the BFID Dr Aslam Alam told the FE Thursday they were presuming that a large amount of money is being spent in the name of CSR activities under the influence of the boards of directors of banks.
He said the management of banks has no power to spend money on CSR without the board's permission. "We heard that some board members of the SoCBs put pressure to allocate CSR funds," he added.
Mr Alam said gaining personal fame by spending public money is not well received by many and that should not be done.
A senior finance ministry official told the FE many directors of banks try to be 'famous' in their own localities by spending money from CSR funds. "Some of them are doing so with political vision which is clearly misuse of public money."
"None is permitted to spend public money for personal gain," he added.
Chairman of Agrani Bank Dr Khondoker Bazlul Hoque welcomed the decision of suspension of CSR activities on the ground of misuse of funds.
But, he said, in general the decision will be costly for the society.
"We pay money to colleges, universities, and hospitals from CSR funds. If it is suspended, many will suffer," he said.
Mr Hoque acknowledged that may be some directors have misused CSR funds and that's why the government has taken the decision.
"There was no restriction from the government on granting of CSR fund on directors' recommendations. Since the government now issued the directive we will follow it in the future," he said.
BDBL chairman Prof Santi Narayan Ghosh said there is a directive from the government to carry out CSR activities for welfare of the poor.
He said his bank has a Tk 20 million fund for CSR activities in the current year. "Most of the CSR fund we spend is for education, healthcare service, helping poor people before festivals, and on other humanitarian grounds."
Mr Ghosh acknowledged that sometimes the board grants CSR funds on directors' request to carry out welfare activities in their localities. "It's true that we can't reject requests of the directors if any of them seeks money from the CSR fund for his locality. But it is also true that none of them pockets the money."
Chairman of Rupali Bank Ltd, Dr Ahmed Al-Kabir, told the FE that his bank is within the annual budget of CSR fund and the allocation in this regard is very nominal.
He said CSR is a new concept for Bangladesh and it is very much necessary for poor people of the country.
Mr Kabir said the directors of the bank are not the only persons to make request for CSR funds. "We receive requests from every community of the society. Whenever someone becomes helpless, he asks for money."
"In some emergency situations, we need to extend help to people. In the event of Rana Plaza collapse, we had to spend a lot. So, suspension of CSR activities is not a good decision," he added.
Neither chairman nor managing director of Janata Bank Ltd could be reached for comment despite several attempts.
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