TERM PAPER ON

GREEN BANKING AND ITS PRACTICES IN BANGLADESH

[Green Banking]

ID:07303125.

TERM PAPER
ON
GREEN BANKING AND ITS PRACTICES IN BANGLADESH

Prepared For:
Mr. Mohammed Jamal Uddin

Associate Professor Department of Finance & Banking University of Chittagong.

Prepared By:
Md. Maidul Hayder 4th Year, BBA ID: 07303125 Session: 2006-2007 Department of Finance and Banking University of Chittagong.

Date of Submission: April 28, 2012

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LETTER OF SUBMISSION
Date: April 28, 2012 To Mr. Mohammed Jamal Uddin Associate Professor Department of Finance & Banking University of Chittagong. Subject: Prayer for accepting the term paper report. Sir, With due respect and humble submission, I like to state that I have completed my Term paper report on Green Banking and its practices in Bangladesh. Though it is a new experience, I have tried my level best to gather information about this topic. Without sincere cooperation and proper guidance of you it was not possible for me to prepare this report. For this act of kindness, I am grateful to you. I would like to express my gratitude for your kind guidance in completion of the report assigned to me. I sincerely hope that this report will meet your expectation and will serve its purposes.

Yours sincerely

_______________ Md. Maidul Hayder B.B.A (4th year) ID: 07303125 Session: 2006-2007 Department of Finance and Banking University of Chittagong.

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LETTER OF CERTIFICATION

This is to certify that Md. Maidul Hayder , ID No: 07303125, B.B.A. 4th year, Department of Finance & Banking, Faculty of Business Administration, University of Chittagong was being satisfied in his term paper period duly with me.

---------------------------------

Mohammed Jamal Uddin Associate professor, Department of Finance and Banking, University of Chittagong.

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PREFACE
Preparation of term paper report is one of the important assignments of 4th year BBA (Hons.). Mainly our study is limited in theories. This term paper program has been designed for the students of 4th year to acquire some practical and special knowledge. Because it is an important thing that students have some piratical knowledge about the current business world. In developed countries business schools give more preference to practical knowledge. Keeping this view in mind our curriculum includes preparation of term paper in which I had to make this report. My report actually concern about environmentally friendly banking (Green banking). During my preparation of report I tried to acquire the information related to concept and current practices of Green Banking in Bangladesh. The paper also includes experts view, evolution, policy guidelines, roles, different products and services as well as related problems of green banking. This paper may work as guidance for different public and private activities. I owe a profound sense of gratitude to my honorable teacher, Mohammed Jamal Uddin, Associate Professor, Department of Finance and Banking, University of Chittagong, whose continuous guidance enable me to complete this report successfully. commercial banks for adopting green banking practices in their day to day

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ACKNOWLEDGEMENT
It was very kind desire of the Almighty that I, Md. Maidul Hayder, have completed the assigned task within the specified time period. For the fear of soundings like a vote of thanks speech, I could not possibly thank all of those marvelous people who have contributed something of themselves directly in preparing this report. First of all, my hearty thanks go to Mr. Mohammed Jamal Uddin, Associate Professor, Department of Finance and Banking, University of Chittagong, for his perseverance and direct supervision. Without his guidelines and valuable advices and suggestions from time to time, I would be failed to complete the whole thing in a right manner. I like to express my tributes and gratitude to all of my friends who directly or indirectly give their in this regard. I am also thankful to our classmates, employees of department and seminar librarian who helped me in various ways, without their cooperation my report cant be prepared in time.

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EXECUTIVE SUMMARY
Sustainable development can best be achieved by allowing markets to work within an appropriate framework of cost efficient regulations and economic instruments. One of the major economic agents influencing overall industrial activity and economic growth is the financial institutions such as banking sector. In a globalised economy, the industries and firms are vulnerable to stringent environmental policies, severe law suits or consumer boycotts. Since banking sector is one of the major stake holders in the Industrial sector, it can find itself faced with credit risk and liability risks. Further, environmental impact might affect the quality of assets and also rate of return of banks in the long-run. Thus the banks should go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force industries to go for mandated investment for environmental management,use of appropriate technologies and management systems. This paper explores the importance of Green Banking, sites international experiences and highlights important lessons for sustainable banking and development in Bangladesh. However, we find that there has not been much initiative in this regard by the banks and other financial institutions in Bangladesh though they play an active role in Bangladesh emerging economy. Therefore, I suggest possible policy measures and initiative to promote green banking in Bangladesh.

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TABLE OF CONTENTS
SL. NO.
1.1 1.2 1.3 1.4 2.1 2.2 2.3

1 INTRODUCTION 2 OBJECTIVE OF THE STUDY 4 METHODOLOGY OF THE STUDY 5 LIMITATION OF THE STUDY 6 7 CHAPTER 2: GREEN BANKING COMMENTS OF EXPERTS ABOUT GREEN BANKING 8 OBJECTIVES OF GREEN BANKING 10 IMPORTANCE OF GREEN BANKING 11 CHAPTER 3: GREEN BANKING PRACTICES 12

PARTICULARS CHAPTER 1: INTRODUCTION

PAGE NO.

IN BANGLADESH
3.1 3.2 3.3 3.4 3.5 3.6 3.7
DRAFT GUIDELINE OF GREEN BANKING IN BANGLADESH GREEN BANKING IN BANGLADESH ROLES OF GREEN BANKING GREEN BANKING PRACTICES AREAS OF GREEN BANKING GREEN BANKING PRODUCTS AND SERVICES PROSPECTS OF GREEN BANKING

13 15 16 19 21 22 23 24 25 26 27

CHAPTER 4: RECOMMENDATION & CONCLUSION

4.1 4.2
RECOMMENDATION CONCLUSION

REFERENCES

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CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION
The term Green Banking is now popular worldwide now-a-days. It is for stopping the environmental degradation and making this planet habitable. The concept of Green Banking was developed in the western countries. Green banking is a general term, which can cover a multitude of areas from a bank being environmentally friendly to how and also where their money is invested. Defining green banking is relatively easy. It means promoting environmental-friendly practices and reducing carbon footprint from banking activities. A green bank is a bank that promotes environmental and social responsibility but operates as a traditional community bank and provides excellent services to investors and clients. Its progressive approach to the community and the earth makes it different from the crowd. A green bank is also called ethical bank, environmentally responsible bank, socially responsible bank, or a sustainable bank, and is expected to consider all the social and environmental factors. Green banking involves pursuing of financial and business policies that are not hazardous to environment rather help conserve environment. The broad objective of green banking is to use resources with responsibility and giving priority to environment and society. It is more about focusing on 'mother planet and its sustainability', shifting from a traditional approach on 'profit' or even 'people'. Gree banking is not just another corporate social responsibility (CSR) activity; it is all about going beyond to keep this world livable without much damage. Green banking, which considers all the social and environmental factors, is also called 'ethical banking'. Ethical banks started with the aim of protecting the environment. These banks are like normal banks that aim to protect the environment and are controlled by the same authorities.

Green banking, compared to normal banking, attaches more importance to environmental Green Banking

factors. Its aim is to provide good environmental and social business practices. It checks all the factors before considering a loan - whether the project is environment-friendly and has any implication on the future of people and planet. On would be awarded a loan only when all environmental safety standards are followed.

Basically, green banking avoids as much as paper work as possible - from go-green credit cards and go-green mortgages to all transactions done online. It creates awareness around business people about environmental and social responsibility, enabling them to adopt environment friendly business practices, and follows environmental standards for lending. When a person is awarded a loan, the interest is less than normal banks because ethical banks give more importance to environment-friendly factors - they do not operate with high interest rates only.

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1.2 OBJECTIVES OF THIS STUDY

The main objective of this study is to know and have a clear idea about the concept of green banking. Along of this objective some other special objectives may be exposed as under: To know the basic concept about green banking. To know the historical background of green banking. To know the objectives of green banking. To know the role of green banking. To know the application of Green banking in various countries. To know the present practices of green banking in Bangladesh. To have knowledge about policy standard set by the Bangladesh Bank for the application of Green Banking.

1.3 METHODOLOGY OF THE STUDY

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The study is based on secondary data source; collected data and information have been processed and analyzed systematically. This term paper has been prepared by latest data to make the study more informative and useful. Study period was only a month. The secondary data and information were collected from Journal. Books. Newspapers. Internet (Search engine). Bangladesh Bank Publication.

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1.4 LIMITATIONS OF THE STUDY

During the completion of this term paper, numerous problems have been encountered for the accomplishment of the study. These problems may be termed as limitation of the study, enumerated as follows: Time frame for the research was very limited. The actual survey was done within a short period. Unavailability of written documents as require for making a comprehensive study. Some supportive materials were not available during the completion of my term paper i.e. PC, Internet facility etc. Last but not the least, in many cases, up to date information is not published.

It seems to me that during completion of this report necessary and up to date information was not possible to gathered, I think if it was possible then a fully fledged and comprehensive report could have been made possible.

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Chapter 2

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2.1 Comments of experts about Green Banking

"We have to change our mindset about environmental issues for making a better future through greening our mind," said Bangladesh Bank Governor Atiur Rahman. "It is time to focus on protecting our planet through initiating green banking, because the main objective of green banking is to protect environment through pursuing environmentfriendly financing policies." said Mamun Rashid, Ex. managing director of Citibank NA. "We need to focus on sustainable development approach because it has a close link with the development of other sectors, banking sector can play a vital role to encourage other industries to go green through promoting eco-friendly financing schemes says Bandana Saha, director general for BIBM. "The banks should prioritise loaning the sectors that promote environmental practices, The banks can also launch green initiatives with their own business operations through pursuing cost minimisation strategies, the financial institutions should initiate 'green office guide' to help protect the eco-system. Use of online communication in stead of printed documents, installation of energy efficient equipment, use of filtered water in place of bottled water and encouraging usage of energy efficient cars are some of the examples of practicing green business said Shah Md Ahsan Habib, director (training) of BIBM. We are facing a negative impact of climate change though we contribute little to global warming, so, we have to focus on adaptation and mitigation process to cope up the adverse impacts of global warming, and green banking initiative can facilitate this process." said Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation. cutting, recycling of materials and equipment and waste

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2.2 Evolution of Green Banking

In March 2009, Congressman Chris Van Hollen in USA introduced a Green Bank Act with the aim of establishing a green bank under the ownership of the US government. Its objective was to offer financial support to efforts to increase efficient energy usage, and reduce carbon emissions and environmental pollution resulting from energy creation. Bank Technology News has recently given Citigroup the US banking giant, top honors in its first ranking of 'America's Greenest Banks'.The award highlighted the accomplishments of Citi's Sustainable Operations and Technology program, which includes dozens of initiatives aimed at shrinking environmental footprints and controlling costs. In just one example, Citi updated computer hardware across the 1,000+ Citibank branches in North America, reducing energy costs by 15 percent a year, while improving the speed with which it services customers. The Financial Times of London announced the Sustainable Banking Awards last year. UK's Cooperative Bank won the 'Sustainable Bank of the Year' award and only HSBC, among large global banks, was a runner-up in any category. The good news is, BRAC Bank Ltd from Bangladesh became the regional winner for 'Asian Emerging Markets Sustainable Bank of the Year', which they are also portraying in all their bill boards and promotion campaigns. Good news for all of us.

2.3 Objectives of Green Banking

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 The broad objective of the Green banks are avoiding waste and giving priority to environment and society. Focusing on environment-friendly initiatives by providing innovative financial and ensure sustainable development. .

Using organizational resources with responsibility. Keeping the world livable for a long period of time. To minimize paper works as much as possible inside and outside the bank. To achieve cost and time efficiency.

2.4 Importance of Green Banking

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The public concern at the state of the environment has been growing significantly in the last few years, mostly due to apparently unusual weather patterns, rising greenhouse gases, declining air quality etc. Banks hold a unique position in an economic system, and can affect production and businesses through their financing activities. However, if green banking simply means incurring additional costs by a bank, it might never be accepted as common business practice by the global banking industry. Though, positive relationship between green banking strategy and profitability has not always been the case, there is evidence that socially and environmentally responsible banks can also be financially successful and have growth rates similar to, or even better than, those of their conventional competitors. Moreover, banks that mainly do business with the depositors' money cannot avoid responsibility to the society. When the common people take care of banks in their bad days, banks must be made responsible to take care of the society as well. Banks that were once seen only as profit motive institutions have been adjusting to a more demanding market and a more socially conscious society over the last two decades. Environmental concern is at the centre of the green banking strategy. An increasing number of global banks around the world are going green by launching environmental friendly initiatives and providing innovative green products. In the long run, the trend towards green banking will be largely driven by consumer behavior. Common people and consumers are becoming increasingly aware of the responsible behavior of businesses.

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Chapter 3
Green Banking Practices in Bangladesh

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3.1 Draft guideline of Green banking in Bangladesh

Bangladesh Bank (BB) has prepared a draft policy guideline for introducing green banking this year in line with global development and response to the environmental degradation. The guideline, posted on the central bank web site, outlines a three-stage roadmap for green banking, requesting public feedback by January 25, 2011. The guideline, in the first phase, suggests all banks to develop green banking policies and establish separate green banking cells and incorporate environmental risk management strategies by June 30 this year. In this phase, the banks are also advised to introduce green and create climate risk funds to finance flood, cyclone and drought prone areas at regular interest rate without charging additional risk premium.

Promoting eco-friendly products, supporting training and events for raising awareness for environmental risk management are also suggested to include in the regular activities of the bank in the next six months. In the second phase, the draft suggests banks to take specific policies by June 2012 for different environmental sensitive sectors such as agriculture, poultry, dairy, farming, tannery, fisheries, textile and apparels, renewable energy, pulp and paper, sugar and distilleries, construction and housing, engineering and basic metal, chemicals, rubber and plastic industry, hospital/clinic, chemical trading, brick manufacturing and ship breaking. During this period, all banks will also set up green branches to use maximum natural light, renewable energy, energy saving light bulbs and other equipments.During the same period, they will have to determine a set of achievable targets and strategies, and disclose these in their annual reports and websites. They will have to set up green branches. The banks should increasingly rely on virtual meeting through video conferencing. According to the draft guideline, banks in the next one year will adopt a green strategic plan, determining their target for green banking. The draft says a system of environment management should be in place in all banks before they step into the third phase of green banking, to be completed by June 2013.

In this final stage, banks will focus on fine tuning of their green activities and will look for

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more innovative products and services to expand eco-friendly business and industries. Commercial banks will have to adopt a comprehensive green banking policy by December 2013 as part of the central bank's efforts to make banking practices more responsible to social and environmental causes. The central bank will name top ten banks for their overall performances in green banking, and will take into account to give it permission to open new branches. In its policy guideline for green banking, the BB said cofriendly business activities and energy efficient industries should get preference in financing by the banks. The banks will have to inform the BB of their initiatives on a quarterly basis within 15 days after the end of a quarter. The first quarterly report has to be submitted by July 15, 2011.Besides avoiding negative impacts on environment through banking activities, the banks are expected to introduce environment friendly green products to address the core environmental challenges of the country. The commercial banks will now require taking measures to protect environmental pollution while financing a new project or providing working capital to the existing enterprises. The guidelines advised the banks to facilitate their clients with utmost care in opening letter of credit for installation of effluent treatment plant (ETP) in the industrial units. They were also asked to finance in solar energy, biogas, ETP and Hybrid Hoffman Kiln (HHK) in brickfield under BB efinance scheme.

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3.2 Green banking in Bangladesh

Bangladesh Bank, the central bank, has a greater role in shaping up a concrete guideline for green banking practices in Bangladesh. According to central bank, each bank and financial institution can formulate a strategy and guideline for Green Banking and Green Financing. The commercial banks are to develop green banking policies and show general commitment on environment through in-house performances by December 31 this year. A high-powered committee will be responsible for reviewing the banks' environmental policies, strategies and programmes. The committee will be comprised of directors from the board in case of scheduled Bangladeshi banks and regional chief of global office and members from the top management including chief executive in case of foreign banks. The banks will allocate a considerable fund in their annual budget for green banking, and set up a separate green banking unit. A senior executive should head the unit, which will report to the highpowered committee time to time. They will have to comply with the instructions stipulated in the detailed guidelines on Environmental Risk Management. The banks will also incorporate environmental and climate change risks as part of the existing credit risk methodology prescribed to assess a prospective borrower. The banks should take measures to save electricity, water and paper consumption, according to the BB guidelines. A 'Green Office Guide' or at least a set of general instructions should be circulated among the employees. Instead of relying on printed documents, online communication should be extensively used (where possible) for office management. Energy saving bulbs should replace the regular ones in branches/offices of the banks. They should make plans to use solar energy on their premises, and encourage employees to purchase energy efficient cars.

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3.3 Roles of Green banking

The people of the whole world are concerned about the environmental degradation, especially the rising of global temperature and thereby melting of glaciers and ice-berg in the polar region and consequently rising of sea level, which will directly affect the low lying countries of the world. The world conscious people are also concerned about the increase of Green House Gases and Chlorofluorocarbons (CFCs) and thereby depletion of Ozone layer. As such, every person and especially the professionals must have greater role to check the environmental degradation.

Bankers are the important professional group who has interaction with the other groups of people and also with general masses. They can adopt different green activities within their in-house environment and also can initiate the protection of the air pollution, water pollution by their clients. Bankers can finance the green projects, which are environmental friendly and discourage the projects that damage the environment. It will be obligatory for each person to show respect to the environmental issues. Otherwise, the environments where the concerned person lives will be inhabitable and as whole the country and the globe will no longer be safe place. We have to use resources carefully and keep in the mind that the reserve of the resources is not unlimited and its excessive use may endanger the future generation. We have to think that each of our activity has a specific impact on the environment.

As a best creation of Almighty, we have greater role to conserve the environment, Green Banking

maintain biodiversity, not to endanger other fauna and flora and above all a green, healthy planet for safe and sound living of our future generations. Since banking industry is a vital institution in the economic and business activity round the world, bankers can not remain indifferent to this burning issue. A banker or a banking industry may address many issues to save environmental degradation and conserve the ecological balance. Green banking is a good way of making people aware of global warming. Each businessman will contribute to the environment and make this earth a better place to live and enjoy. In addition, it is envisaged that this institution is going to work towards reducing the country's dependence on foreign energy sources, fighting climate change

and creating additional jobs through the provision of healthier energy generation facilities.Green finance may cover all the financial services related to the promotion and development of green industry and green economy where the environmental benefits in terms of reduced carbon dependency or reduced ecological scarcity are the most significant. Green banking practices of banks are connected with both internal operation and product ecology. Some banks are engaged in carbon offsetting, which refers to the effort of canceling out the climate-changing effects of its own greenhouse gas emissions. Banks, by using their commercial lending and securities underwriting, may catalyze the necessary transition to an economy that minimizes greenhouse gas pollution and relies on Green Banking

energy efficiency. There is no doubt that the combined threats associated with climate change and biodiversity loss call for a deeper commitment of resources and investment from all stakeholders. In the endeavor of emission reduction and conservation, stakeholders have been contributing in different ways in different countries and regions. Green banking is just one of the initiatives by stakeholder - banks and financial institutions. The environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other businesses. The banks will have to go for online banking by eliminating paper waste, saving gas and carbon emission, reducing printing costs and postage expenses.

3.4 Green Banking practices

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Practices of in house Green Banking :

Waste Management: A green banker must be cautious about wastage and waste management. We should try to control the wastage of resources like water, gas, electricity, paper, foods etc. For example, if we draft our letters on a computer rather than in paper, it will save millions of paper as well as thousands of trees that provide raw materials for paper production. Similarly, if we select a location of the branch of a bank with sufficient access to light and air, it will save huge electricity and create a healthy environment. Wastages must be grouped like organic and inorganic wastage. Organic materials like food, vegetables, animals etc. can be recycled for manure, gas and electricity etc. The inorganic material like paper, bottles, pots etc. can be recycled. Wet and degradable materials can be processed directly keeping under the soil. The recycling materials should be disposed off at the respective disposal site and the rotten items should be buried under the soil and as such, pollution can be protected. Clean and hygienic environment: A green banker will not throw any waste, bottles or packing materials here and there. Each group of waste should be kept in a separate place, which does not pollute the environment and all the wastes must be disposed off separately. A green banker will not spit or cough on the floor, walls or on the road. On line statements, emailing documents: We must send account statements and balance confirmation etc. to the clients through online and through email, which will save paper, time, cost and above all the environment. We may use these technologies for our clients as well as inter bank correspondence.

Sound Pollution: We should keep our voice low when we converse and also convince our clients maintain this for the sake of healthy working environment in the branches.

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Installation of solar panel in the rural branches and using high mileage vehicles or using shared vehicles instead of personal vehicle: Since Bangladesh is an energy deficit country we can install solar panels in all Branches as an alternative energy source. We can also use the vehicles which consume less fuel which will save huge fuel import of the country. We can also use big vehicles to carry the employees of the Banks instead of personal vehicle to reduce fuel as well traffic jam inthe roads.

Practices by the Bankers in their business area :

Financing only the green projects: Bankers must be aware of the environmental issues and they must go for financing the projects that do not pollute the environment. The industries that are financed by the banks must have effluent treatment plant (ETP), recycling facilities and smoke and gas arresting unit. The industries must not release any kind of effluents, chemicals or smoke to the environment. Banks must not finance any dirty project that pollutes the environment. Voluntary activities of Banks: Banks should take initiative to make their clients aware by organizing seminar and symposium. They can organize awareness campaign in schools and colleges. They can participate in the tree plantation and cleanliness programmes in city areas. Working on specific green project: Our country has lot of problems of proper waste management, drainage and sanitation, and affected by river pollution, water pollution by pesticides etc. Every bank can undertake a specific green project for removal of existing polluting substances from the ecosystem.

3.5 Areas of Green Banking

Green Bank comes in many forms. Using online banking instead of branch banking.

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Paying bills online instead of mailing them. Opening up CDs and money market accounts at online banks, instead of large multi-branch banks. Green Bank looks at green banking in three areas - operational, technological and client acceptance. Banks have made improvements in the operational area such as replacing our daily courier service with scans and electronic delivery. All employees receive paychecks and reimbursement checks electronically.

3.6 Green Banking products and services

Financial institutions are rushing to market with new or re-packaged product and service

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offerings from green auto insurance to innovative pro-eco mortgages sustainability-backing investment funds.

and new

Green Deposits: Banks can offer higher rates on CDs, money market accounts, checking accounts and savings account if customers opt to conduct their banking activities online. Green Mortgages and Loans: A green mortgage offers better rates or terms for energy efficient houses. Green mortgages can allow home buyers to add as much as an additional 15 percent of the price of their house into loans for upgrades including energy-efficient windows, solar panels, geo-thermal heating or water heaters. The savings in monthly energy bills can offset the higher monthly mortgage payments and save money in the long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved green mortgage that will credit you for your homes energy efficiency in the mortgage itself. Many home improvements also qualify for the energy tax credit. Anyone undertaking an energy-saving house project should shop around for a bank that offers a special rate for a green mortgage or loan. Green Credit Cards: A green credit card allows cardholders to earn rewards or points which can be redeemed for contributions to eco-friendly charitable organizations. These cards offer an excellent incentive for consumers to use their green card for their expensive purchases. Imagine the millions of dollars that could be raised for worthwhile environmental groups if green credit cards really took off. Green Reward Checking Accounts: A product called reward checking accounts pays a bonus rate to customers who go green. Customers can earn higher checking account rates if they meet monthly requirements like receiving electronic statements, paying bills online or using a debit or check card. With this banking product higher rates and eco-friendly livings go hand-in-hand.

3.7 Prospects of Green Banking

The banking sector may also have significant impacts on biodiversity while providing financial support to high impact sectors such as forestry, mining, oil and gas, fisheries, Green Banking

and infrastructure. In project finance, banks may exercise their powers through assuming roles as environmental policeman to ensure that their borrowers comply with the environmental standards, and could enter into a partnership with different industries and encourage companies to be more sustainable. Regulatory enforcement by governments, pressure from the civil society and consumers, voluntary support, and responses by the business entities are preconditions for creating a congenial atmosphere for offering and accepting productive green banking services. A common platform or unique approach by the policy makers and civil society groups in all countries or regions would give the best result. However, creating a common platform and launching a uniform approach would require major political effort by all global economies - a tough job.Bangladesh Bank has already provided Tk 200 crore for renewable energy in which the share of green energy would be 2 per cent in total energy.

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RECOMMENDATION & Chapter 4 CONCLUSION

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4.1 Recommendation
Bank should keep following aspects in mind while financing any projects:
1.Analyzing the project in terms of scale, nature and the magnitude of environmental impact. The project should be evaluated on the basis of potential negative and positive environmental effects and then compared with the without project situation. There should be an Environmental Impact Assessment (EIA) of each project recommending the measures needed to prevent, minimize and mitigate the environmental negative impact before financing the projects. 2.While investing or funding the projects, the financial institutions should assess the sensitive issues like vulnerable groups; involuntary displacement etc and projects should be evaluated in terms of environmentally important areas including wetlands, forests, grasslands and other natural habitats. 3.Banking institutions need to evaluate the value of real property and the potential environmental liability associated with the real property. Therefore, the banks should have right to inspect the property or to have an environmental audit performed through the life of the loan. 4.Banks also need to monitor post transaction for the ideal environmental risk management program (Rutherford, 1994) during the project implementation and operation. There should be physical inspections of production, resources, training and support, environmental liability, audit programs etc. 5.The next round of evaluation includes loan structuring, credit approval, credit review and loan management. Further banks have annual audits, quarterly environmental compliance certificate from the independent third party and also from the government

Further the banks can introduce green bank loans and products like:
i. Investing in environmental projects (recycling, farming, technology, waste, etc) for example reduced-rate of interest on loans to homeowners who install a solar energy system ii. iii. Providing option for customers to invest in environmentally friendly banking products Investing in resources that combine ecological concerns and social concerns

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4.2 Conclusion

There is a growing awareness among banks and financial institutions to protect the environment and thereby save 'mother planet'. Big banks are committing large funds on a sustainabl basis in responsible banking, creating more values for our next generation. They are shifting forward from 'profit' to 'people' and now more importantly, to create a better future for all. The sooner this philosophy of 'green banking' is embraced, the better it is for all. A good online banking system is the linchpin of reduced costs, improved performance and competitiveness. We provide the service at no cost to our retail and business customers. The logical progression of online banking - converting existing customers to online bill payment - is a harder step and can require a lot of legwork. Once customers get here, there is the chance of moving to completely electronic banking. Environmental conservation and protection of ecological balance should be maintained through combined efforts of multi stakeholders. The main stakeholders are businessmen, consumers and professionals, NGOs and government organizations. As green initiatives sweep across the globe, more and more banks have been adopting green banking practices. Today, many banks are assessing environmental risk while selecting a project for financing. Even as the market slows in the face of economic upheaval, many banks are keeping a focus on green. The positive outcomes of these green initiatives are evident in many instances. However, these are the results of collective efforts. There is no doubt that the progress so far has been made possible because of the substantial efforts of all stakeholders, covering banks, policy makers, civil society organizations, international development and financial institutions, business entities and the common people (consumers).

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References
1.

Bangladesh Bank Info on Mon, March 28 2012 08:55 am

2. FE (The Financial Express) Report, http://www.thefinancialexpressbd.com/more.php?news_id=112054 visited on 12.4.2012; 12:20 am 3. Jeucken, M (2001) Sustainable Finance and Banking, The finance Sector and The Future of the Planet. London, Earthscan. 4. Down to Earth, Enter the Green Rating Project (Science & Environment Fortnight), July 31,1999. 5. Hart, Stuart. (1995), Does it Pay to be green? An Empirical Examination of the relationship between Emissions Reduction and Firm Performance Business Strategy and the Environment (September).

6. FE (The Financial Express) Report, http://www.thefinancialexpressbd.com/more.php?news_id=112054. Visited on 18.4.12. 8.00 pm. 7. Star Business Report, http://www.thedailystar.net/newDesign/newsdetails.php?nid=154690. Visited on 20.4.12. 1.OO am. 8. http://www.thefinancialexpress-bd.com/more.php?news_id=114842. 9. http://theindependentbd.com/business/banking/12386-green-banking-getsbangladesh-banks-support.html 10. http://www.bibm.org.bd/index.php?option=com_content&view=article&id=157& Itemid=6 11. http://bankinfobd.com/blog/bb-draws-green-banking-roadmap. Visited on 24.4.12. 12. http://www.bssnews.net/newsDetails.php?cat=2&id=135054&date=2010-10-02

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