This recent reduction continues the downward trend observed in the first half of 2023, where CSR spending by Islamic banks dropped nearly 30.95 percent compared to the same period in 2022, as reported by BB. A senior executive at a private commercial bank attributed this decline to constrained cash flow, noting that many banks are resorting to borrowing, indicating financial strain.
This trend is part of a broader decline in CSR expenditure in recent years. For example, in 2021, CSR spending was Tk 2.75 billion, down from Tk 3.44 billion in 2020. As of March 2024, 10 fully-fledged Islamic banks were operating with 1,672 branches, representing nearly 15 percent of the total banking branches in the country. Additionally, 31 Islamic banking branches from 15 conventional commercial banks and 646 Islamic banking windows by 16 conventional banks further contribute to the provision of Islamic financial services.
Islamic banks fund their CSR activities from several sources, including Zakat (mandatory charitable giving), compensation charges on defaulting investment clients, and other Shariah-compliant income. These funds support various initiatives, such as education, training, healthcare, and local charitable organizations.
In its latest report, Bangladesh Bank recommended that Islamic banks enhance their CSR efforts to promote socio-economic development. BB data indicated that total deposits in the Islamic banking system reached over Tk 43.94 billion at the end of March 2024, reflecting a slight decrease of Tk 39.38 billion or 0.89 percent compared to December 2023. Meanwhile, total investments (loans & advances) stood at more than Tk 45.69 billion at the end of March 2024.
Zafar Alam, managing director and CEO of Social Islami Bank Limited (SIBL), mentioned that despite an increase in their CSR spending this fiscal year, the bank’s environmental initiatives remain limited. He highlighted the bank’s current support for flood-stricken communities in Sylhet and expressed optimism about the future CSR performance of the Islamic banking sector.
