Expenditure on Corporate Social Responsibility (CSR) activities by Islamic banks in Bangladesh experienced a notable decline in the October-December quarter of 2024 than the corresponding period of the previous year.
According to a latest Bangladesh Bank (BB) report, banks spent Tk 0.78 billion on social programmes during the period, up from Tk 0.58 billion in the July-September 2024 quarter and significantly lower than Tk 1.29 billion in the same quarter of 2023.
CSR spending during the period under review declined by 39.53 per cent year on year compared to the October-December 2023 quarter.
Islamic banks undertake and implement various types of social programmes under its CSR activities.
Sources of funds of Islamic banks available for CSR activities include zakat, compensation charges (penal charges from defaulting investment clients) and Shariah-permitted other sources of earnings.
These funds are spent among different types of education, training, health, and charity-based organisations in Bangladesh.
Islamic banks serve the deprived and disadvantaged people who remain outside the purview of the conventional banking system due to extreme poverty.
Islamic banks always try to make financial transactions based on human necessities and embark on productivity-oriented projects or activities to reduce the incidence of poverty.
Expenditure on CSR activities during January-March 2024 reached Tk 0.85 billion, according to the central bank data.
On the other hand, spending on similar activities climbed to Tk 0.80 billion during the April-June 2024 quarter.
At present, the Islamic banking system represents more than 25-per cent share of deposit and 28 per cent of investment of the whole banking sector.
Stakeholders have called for increased focus on strengthening CSR frameworks and ensuring adequate allocation of resources to support vulnerable populations.
The commitment of Islamic banks to align their financial activities with ethical and social objectives should be critical in navigating these challenges and continuing their efforts to reduce poverty and enhance social welfare in Bangladesh, they said.
The central bank directed the Islamic banks to enhance their CSR activities for socio-economic development with an eye to serving humanity through philanthropic activities, giving emphasis on health, education, disaster management, rehabilitation, poverty eradication and so on.
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