Corporate social responsibility (CSR) spending by the country's Islamic banking sector fell nearly 30.95 per cent in the first half of 2023 compared to the same period in 2022, according to Bangladesh Bank data.
The CSR spending totalled Tk 2.01 billion from January to June 2023, down from Tk 2.91 billion in the same period of 2022.
For the decline in CSR spending, a top executive at a private commercial bank pointed the finger at constrained cash flow stemming from governance deficiencies.
The CSR figure for 2021 was Tk 2.75 billion, compared to Tk 3.44 billion in 2020.
"Many banks are resorting to borrowing, indicating financial strain," said the executive. "This challenge underscores the need for enhanced governance to stabilise cash flow and prioritise CSR initiatives."
CSR influences an organisation's decision on its ethical and social need approaches in corporate practices and is also important for sustaining long-term development.
The Islamic banking sector holds a nearly 30 per cent share of the country's total banking industry and contributes to socio-economic and environmental progress through its CSR activities.
The executive said that by strengthening internal controls and transparency, Islamic banks can mitigate financial constraints and effectively fulfil their social responsibilities.
Collaborative efforts within the sector are essential to implement robust governance reforms, ensuring long-term financial resilience and sustainable social impact.
On a different note, the central bank data shows total Islamic banking system assets grew 2.27 per cent to Tk 5.47 trillion (Tk 5,471.99 billion) at end-June 2023, up from Tk 5.32 trillion (Tk 5,324.32 billion) at end-December 2022.
Total deposits rose 4.59 per cent to Tk 4.27 trillion at end-June 2023, compared to Tk 4.08 trillion at end-December 2022.
The number of Islamic bank branches, including Islamic branches/windows of conventional commercial banks, reached 2,240 at end-June 2023, up from 2,163 in 2022 and 2,003 in 2021.
The share of Islamic banking branches/windows represented 19.73 per cent of the total branch network in 2022, rising to 20.04 per cent by end-June 2023.
Social Islami Bank Limited's Managing Director and CEO Zafar Alam highlighted his bank's significant increase in CSR expenditure, demonstrating its commitment to supporting disadvantaged groups.
He noted that the bank achieved nearly 100 per cent of its CSR targets while showcasing a remarkable 25 per cent growth in both export and import during FY23 compared to FY22.
Alam expressed optimism about the Islamic banking sector's future CSR performance, anticipating a more robust commitment in the coming days.
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