Internship Report on CSR of Mutual Trust Bank Ltd Part 2

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Chapter- 1 Introduction

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1.1

Introduction

Banking sector is one of the fastest growing sector in Bangladesh like the whole world. Therefore understanding the policies of banks and financial institutions has become a mandatory issues for everyone and especially for business graduate. This internship report was prepared to fulfil the Bachelor of Business Administration (BBA) degree and to evaluate my knowledge regarding Corporate Social Responsibility. As a part of the internship program I had to work in Babu Branch of Mutual Trust Bank Ltd. (MTB). Therefore I have prepared the whole report on the CSR Activities of Mutual Trust Bank Limited. The report will be divided in five chapters completed with references and appendix. The chapters will be Introduction, Profile of MTB, Literature Review, Analysis and Findings, and Recommendation and Conclusion.

1.2

Background of the report

For any business school student only curriculum activity is not enough for handling the real business situation, therefore it is an opportunity for the students to know about the field of business through the internship program. As internship program is a perfect blend of the theoretical and practical knowledge. This report is originated to fulfill the requirement of the assign project internship report on “Corporate Social Responsibility of Mutual Trust Bank Ltd.” In this regard an organization attachment at Babu Bazar Branch of Mutual Trust Bank Ltd. has been given to me a period of 45 days. During this period I learned how the host organization works with the help of the internal supervisor.

1.3

Objectives of the report

a. Primary objective: The report will try – 1. To relate theoretical knowledge to practical experience in several Corporate Social Responsibility. 2. To know about the previous and present CSR Activities of Mutual Trust Bank Limited 3. To know the terms and conditions of CSR Activities of Mutual Trust Bank Limited. 4. To identify problems and recommend solution in CSR Activities of Mutual Trust Bank Ltd.

3 b. Secondary objective Fulfilling the requirement of “MGT BBA I” course by the preparation and submission of my internship report on “Corporate Social Responsibility of Mutual Trust Bank Ltd.”

1.4

Methodology of the Study

This reports mainly works with secondary data source due to lack of availability of primary data source. The methodology of the report is given belowa. For the procedure of different banking operations, I had observed the operations and waked with the officers at the same time. I had interviewed the MTBL officials for getting more information. b. For the analysis part, data have been collected from Intranet, Official Websites, Different statements and the Annual report of the Mutual Trust Bank Ltd.

1.5

Sources of Information

To prepare this report all the necessary information collected from secondary sources of data. Being an analytical report there was little to no option for collection primary data. Secondary sources of data are of two kindsInternal: Annual Reports of Mutual Trust Bank Ltd., Other published documents of the bank, Websites of Mutual Trust Bank Ltd. External: Books, Articles, Journals, Newspaper, Web browsing. Beside the secondary sources of data, practical deskwork and observation techniques are also used as primary sources of data to prepare this report. Though meagre in amount it has still helped the writer a lot on the progress of this work.

1.6

Significance of the Study

This internship report is an important partial requirement of four years BBA graduation program. This is because knowledge and learning become perfect when it is associated with theory and practice. By this internship program students can establish contacts and networking. Contacts may help to get a job in practical life. That is, student can train and prepare themselves for the job market. A poor country like Bangladesh has an overwhelming number of unemployed educated

4 graduates. As they have no internship experience they have not been able to gain normal professional experience of establish networking system, which is important in getting a job. Therefore, it is obvious that the significance of internship is clearly justified as the crucial requirement of four years BBA graduation.

1.7

Scope of the Report

Mutual Trust Bank Limited is one of the new generation banks in Bangladesh. The scope of the study is limited to the Babu Bazar Branch only. The report covers the topic “CSR Activities of Mutual Trust Bank Ltd.” To conduct a study on CSR Activities of Mutual Trust Bank Ltd., I have gathered valuable information from MTB, Babu Bazar Branch and I have also got some information from website of Mutual Trust Bank Ltd. Despite this topic there are many sectors for working and analysis, like: An overview of Mutual Trust Bank Limited Financial performance of MTB CSR Activities scenario of MTB Comparison with other Banks.

1.8

Limitations of the Study

The Term paper is likely to have following limitations: 1. Lack of adequate primary and secondary data of the subject of the selected bank. 2. 45 days of internship was not enough for a complex subject like CSR. 3. The employees in Mutual Trust Bank Ltd, Babu Bazar branch are so much busy in their responsible fields; they could hardly provide little time to discuss. 4. Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful. 5. Lack of practical experience in the relevant field I faced many problems in formulizing the data.

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Chapter-2 Overview and Activities of MTBL

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2.1

An overview of Mutual Trust Bank Limited

The Company was incorporated as a Public Limited Company in 1999, under the Companies Act 1994, with an Authorized Share Capital of BDT 1,000,000,000 divided into 10,000,000 ordinary shares of BDT 100 each. At present, the Authorized Share Capital of the company is BDT 10,000,000,000 divided into 1,000,000,000 ordinary shares of BDT 10 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business: Wholesale Banking Retail Banking International Trade Financing Small and Medium Enterprises (SME) Banking NRB Banking Privilege Banking Card Services Treasury Operations The Company (Bank) operates through its Head Office at Dhaka and 103 branches. The Company/ Bank carries out international business through a Global Network of Foreign Correspondent Banks Registered Name of the Company SWIFT CODE Mutual Trust Bank Limited MTBL BD DH Company Registration No. Bangladesh Bank Permission No. c38707(665)/99 on September 29, 1999 BRPD (P)744(78)/99-3081, October 5, 1999 Registered Office: Corporate Website MTB Centre, 26 Gulshan Avenue www.mutualtrustbank.com Plot 5, Block SE(D), Gulshan 1, Dhaka 1212 Memberships Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI, D) The Institute of Banker’s Bangladesh (IBB) Bangladesh Foreign Exchange Dealer’s Association (BAFEDA) Bangladesh Institute of Bank Management (BIBM) International Chamber of Commerce Bangladesh Limited (ICCB) Bangladesh Association of Banks (BAB) Association of Bankers Bangladesh Limited (ABB) Bangladesh Association of Publicly Listed Companies (BAPLC) American Chamber of Commerce in Bangladesh (AMCHAM) Primary Dealers Bangladesh Limited (PDBL)

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2.2

MTB Vision

Mutual Trust Bank's vision is based on a philosophy known as MTB3V. They envision MTB to be: i. One of the Best Performing Banks in Bangladesh ii. The Bank of Choice iii. Truly World-class Bank

2.3

MTB Mission

We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company, that offers an array of products and services in the search for excellence and to create an impressive economic value.

2.4

Strategic Objectives

a. To maintain a discreet credit policy. b. To enhance versatility and diversification through the penetration of new market segments, thereby fulfilling unmet needs. c. To ensure inflow of funds at combination of least possible cost. d. To improve administrative and organizational structures in order to prepare the platform for best practices of corporate governance. e. To practice stronger IT- driven initiatives that will meet the challenges and requirements of the bank and its clientele. f. To provide extensive career opportunities through competitive pay and a flexible environment. g. To extend financial assistance to the citizenry, living at dispersed locations by expanding the network of branches. h. To enrich the banking sector with improved awareness on Corporate Social Responsibility.

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2.5

Management Hierarchy

The management of the bank is vastly on a Board of Directors, for overall supervision and directions on policy matters by the board. The power of general supervision and control of me affairs of the bank is exercise by the president and managing director of the bank who is the chief executive officer. Above all, the bank will be manned and managed by a galaxy of talented professionals proficient in the individual fields and dedicated to the cause of the bank.

Figure 1: Management Hierarchy of MTB

Managing Director Senior Executive Vice President

Executive VicePresident Vice President Senior Assistant Vice President Assistant Vice President First Assistant Vice President Junior Assistant Vice President Senior Officer Officer/Trainee Officer Junior Officer Assistant Officer

Source: (Secondary Data Provided by HR Department)

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2.6

Capital Structure

The capital structure of Mutual Trust Bank Ltd. is quite strong. At present, Authorized Capital of the company is BDT 10.00 Billion (BDT 1000.00 crore) divided into 100,000,000 ordinary shares of BDT 100 each. Table 1: Authorized & paid up Capital of MTB (2010-14) Authorized Capital Paid up Capital Year BDT Million BDT Million 2010 10,000 2,120 2011 10,000 2,543 2012 10,000 2,543 2013 10,000 2,798 2014 10,000 3,078 Source: MTB Annual Report 2014 P-182

2.7

Credit Rating Report

Mutual Trust Bank Ltd was rated by Credit Rating Agency of Bangladesh (CRAB) on the basis of financial audited Statement, as on 31 Dec 2013.The Summary of rating is presented below: Table 2: CRAB Rating (2012-13) Status 2012 AALong Term Short Term ST-2 Source: MTB Annual Report 2014 P-184

2013 A1 ST-2

Commercial banks rated A1 in the long term are adjudged to be to be strong banks, characterized by good financials, healthy and sustainable franchises and a first rate operating environment. This level of rating indicates strong capacity for timely payment of financial commitments with low likeliness of being adversely affected by foreseeable events. Commercial banks rated ST-2 in the short term are considered to have strong capacity for timely repayment. Banks rated in this category are characterized with commendable position in terms of liquidity, internal fund generation, and access to alternative sources of funds is outstanding.

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2.8

Products and Services provided by MTB

Mutual Trust Bank Ltd. provides the following services and financial products: (I). Retails Banking: We aim to satisfy all clients, regardless of how big or small they may be. Individuals are counseled on the best type of accounts suitable to them. At MTB we have designed different type of retail product to meet different need. The following are our range of retail banking product. Deposit Product: 1. Savings Account 2. Current Account 3. Brick By Brick 4. Children’s Education Plan 5. Fixed Deposit 6. Monthly Benefit Plan 7. MTB Senior 8. MTB Inspire 9. MTB Double Saver Plan. 10. MTB Millionaire Plan. 11. MTB Ruby. Loan Product: 1. MTB Personal Loan 2. MTB Auto Loan 3. MTB Home Loan. 4. MTB Home Equity Loan MTB Card: 1. Debit Card 2. Credit Card (II). Corporate Banking: The promise of world class corporate banking has created a new panorama opportunity to leverage on our excellent image created over the years. MTB offer flexible of options to afford the right financial products and services, designed particularly to meet immediate needs, individually concerned and professionally realized. Now we focused our corporate Banking. 1. 2. 3. 4. 5.

Term Finance. Working Capital Finance. Trade Finance Offshore Finance. Syndication & Structured Finance.

11 (III). SME Banking: SME’s has different types of credit needs and have designed a number of loan products to meet the needs. MTB Green Energy Loan. a. b. c. d. e. f.

MTB Bhagyoboti MTB Krishi MTB Mousumi MTB Revolving Loan MTB Small Business Loan Micro Digoon

(IV). Treasury Service: 1) 2) 3) 4)

Money Market. DIBOR. Foreign Exchange. Primary Dealers.

(V). MTB Services: 1. Corporate Banking. 2. Institutional Banking. 3. Off-Shore Banking. 4. Investment Banking. 5. Merchant Banking. 6. Securities Trading and Brokerage Service. 7. SME Banking. 8. Consumer Banking. 9. Card Services. 10. Leasing. 11. Services Non Resident Bangladeshi (NRBs).

2.9

Mutual Trust Bank Ltd. Babu Bazar Branch

In the very beginning of 2000 Mutual Trust bank Limited has opened its 3rd branch at Armanitola, Dhaka named Babu Bazar Branch. It has a total number of 16 employees and 6 office staffs. Also the bank has a supervisor and three security guards. The workforce is very much co-operative both to each other and to the clients; Babu Bazar Branch is one of the branches of the Mutual Trust Bank Limited that can be counted among the best operated branches of Mutual Trust Bank Ltd. both in terms of profitability and operational efficiency.

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General Banking (GB) Department: Some of the day-to-day activities of this department are the following. 1. Account Opening 2. Receiving Cheques for Clearing, Transport, and Dispatch 3. Issuance of Cheque 4. Issuance of PO (Pay Order), DD (Demand Draft), etc. 5. Fund Transfer 6. Closing and Transfer of Accounts 7. Maintaining the Locker of the Bank 8. Outward Clearing of IBC and OBC 9. Opening and Maintaining of FDR and other Scheme Deposits 10. Utility bill, Rent of building and work of accounts department was done by GB because they don’t have any separate accounts department 11. Maintaining On-line Voucher

Cash Department: This department is responsible for cash payment and receipt. The employees in this department are also liable for computer posting, passing cheques, and accuracy of posting, balancing on-line accounts, etc.

Credit Department: This department is responsible for the following jobs: i. Preparing CIB Statements ii. Preparing Credit Proposal and Statement iii. Prepare the application form to provide loan iv. Administration of Retail Credit

Foreign Exchange Department: i. ii. iii. iv. v. vi.

Verification of L/C application L/ C opening. Advising L/C Sanction the application Export trade financing Remittance

Front Desk and Customer Care Department: Searching for new customer, answer the inquiry about the product to the customer. They also look whether customer all documents are given or not of Babu Bazar Branch

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2.10 Lessons Learned From the Internship Program During my whole internship program I have learned the following things from Mutual Trust Bank Limited. 1. How to fill up a cheque requisition form 2. How to issue a CD/SB cheque Book 3. How to cheek account Balance in Flora Software 4. How to register inward mails. 5. How to fill up a Positive Pay 6. How to open an account 7. What are the formation/papers needed for a CD/SB account

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Chapter- 3 Theoretical Part

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3.1

Corporate Social Responsibility (CSR)

Corporate social responsibility (CSR) refers to a business practice that involves participating in initiatives that benefit society. Liz Maw, CEO of nonprofit organization Net Impact, noted that CSR is becoming more mainstream as forward-thinking companies embed sustainability into the core of their business operations to create shared value for business and society. There is no universally accepted definition of CSR. There are different type of views on what CSR is and what it is not. It would be motivating to derive a meaning of the concept with the dissection of each of the words. CSR is not a difficult concept and can be explained as: Corporate - means organized business; Social - means everything dealing with people, the society at large; Responsibility - means accountability between the two. Early CSR reports often focused on philanthropy as a driver of CSR. That notion has been supplanted by a broad commitment to protecting and improving the lives of workers and the communities in which companies do business. CSR reports now typically address issues impacting virtually every area of operations: governance and ethics; worker hiring, opportunity and training; responsible purchasing and supply chain policies, and energy and environmental impact.

The corporate social and environmental responsibility movement, known more generally as corporate responsibility (CR), shows little sign of waning. Almost all large corporations now run some form of corporate responsibility program. Despite this widespread belief that CR can simultaneously improve societal welfare and corporate performance, most companies are largely in the dark when it comes to understanding how their stakeholders think and feel about these programs. It examines the two most important stakeholder groups to companies – consumers and employees – to comprehend why, when and how they react to CR. Armed with this insight, it shows how companies can maximize the value of their CR initiatives by fostering strong stakeholder relationships to develop, implement and evaluate compelling social responsibility programs that generate value for both the company and its stakeholders.   

Provides a framework for understanding how stakeholders view, interpret and respond to CR programs Describes how companies can use the framework to design highly compelling CR programs Shows how companies can use the framework to improve CR communications

3.2

Views of Corporate Social Responsibility

There are two views of corporate social responsibility. Those are: a. The Classical View b. The Socio economic view a. The Classical View The view that management’s only responsibility is to maximize profits. Business is only for making profit not for society.

16 b. The Socio Economic View This is the modern views of today’s global business and economy. In this view management’s social responsibility goes beyond making profit to include protecting and improving society’s welfare.

3.3

Types of corporate social responsibility

CSR can encompass a wide variety of tactics, from giving nonprofit organizations a portion of a company's proceeds, to giving away a product or service to a worthy recipient for every sale made. Here are a few of the broad categories of social responsibility that businesses are practicing: Environment: One primary focus of corporate social responsibility is the environment. Businesses, both large and small, have a large carbon footprint. Any steps they can take to reduce those footprints are considered both good for the company and society as a whole. Philanthropy: Businesses also practice social responsibility by donating to national and local charities. Whether it involves giving money or time, businesses have a lot of resources that can benefit charities and local community programs. Ethical labor practices: By treating employees fairly and ethically, companies can also demonstrate their corporate social responsibility. This is especially true of businesses that operate in international locations with labor laws that differ from those in the United States.

3.4 

Some others types of CSR

Community based CSR: Businesses work with other organizations to improve the quality of life of the people in the local community.

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HR based CSR: Projects that improve the wellbeing of the staff. Corporate Social Responsibility (CSR) which is provided for development of Human Resources and focuses on wellbeing of the staff.

3.5

Advantages of Corporate Social Responsibility

In today’s digital, fast speed world, each business, small or big, needs to have a CSR program in place. If CSR is not yet part of your daily business practice, you must act fast. Or else you’ll lose the trust of the people who are important to your business. Believe it or not but the expectations of your staff, customers and the wider community have changed. You are no longer in control. They are.

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a. Satisfied employees. Employees want to feel proud of the organization they work for. An employee with a positive attitude towards the company, is less likely to look for a job elsewhere. It is also likely that you will receive more job applications because people want to work for you. More choice means a better workforce. Because of the high positive impact of CSR on employee wellbeing and motivation, the role of HR in managing CSR projects is significant.

b. Satisfied customers Research shows that a strong record of CSR improves customers’ attitude towards the company. If a customer likes the company, he or she will buy more products or services and will be less willing to change to another brand. Relevant research: 

IBM study ‘Attaining Sustainable Growth through Corporate Social Responsibility’: The majority of business executives believes that CSR activities are giving their firms competitive advantage, primarily due to favorable responses from consumers.

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Better Business Journey, UK Small Business Consortium: “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.”

c. Positive PR CSR provides the opportunity to share positive stories online and through traditional media. Companies no longer have to waste money on expensive advertising campaigns. Instead they generate free publicity and benefit from worth of mouth marketing.

d. Costs reductions Yes, you read this correctly. A CSR program doesn’t have to cost money. On the contrary. If conducted properly a company can reduce costs through CSR.

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Companies reduce costs by: i.

More efficient staff hire and retention

ii.

Implementing energy savings programs

iii.

Managing potential risks and liabilities more effectively

iv.

Less investment in traditional advertising

e. More business opportunities A CSR program requires an open, outside oriented approach. The business must be in a constant dialogue with customers, suppliers and other parties that affect the organization. Because of continuous interaction with other parties, your business will be the first to know about new business opportunities.

f. Long term future for business CSR is not something for the short term. It’s all about achieving long term results and business continuity. Large businesses refer to: “shaping a more sustainable society” “Deliver a sustainable society in which business and its stakeholders can prosper in the long term”

3.6

Potential business benefits

A large body of literature exhorts business to adopt measures non-financial measures of success. While CSR benefits are hard to quantify, Orlitzky, Schmidt and Rynes found a correlation between social/environmental performance and financial performance. The business case for CSR within a company employs one or more of these arguments:

a. Triple bottom line "People, planet and profit", also known as the triple bottom line form one way to evaluate CSR. "People" refers to fair labour practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting definitions of profit). This measure was claimed to help some companies be more conscious of their social and moral responsibilities. However, critics claim that it is selective and substitutes a company's perspective for that of the community. Another criticism is about the absence of a standard auditing procedure.

b. Human resources A CSR program can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often consider a firm's CSR policy. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved

19 through payroll giving, fundraising activities or community volunteering. CSR has been credited with encouraging customer orientation among customer-facing employees.

c. Risk management Managing risk is an important executive responsibility. Reputations that take decades to build up can be ruined in hours through corruption scandals or environmental accidents. These draw unwanted attention from regulators, courts, governments and media. CSR can limit these risks.

d. Brand differentiation CSR can help build customer loyalty based on distinctive ethical values. Some companies use their commitment to CSR as their primary positioning tool, e.g., The Co-operative Group, The Body Shop and American Apparel. Some companies use CSR methodologies as a strategic tactic to gain public support for their presence in global markets, helping them sustain a competitive advantage by using their social contributions as another form of advertising.

e. Reduced scrutiny Corporations are keen to avoid interference in their business through taxation and/or regulations. A CSR program can persuade governments and the public that a company takes health and safety, diversity and the environment seriously, reducing the likelihood that company practices will be closely monitored.

f. Supplier relations Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses CSR to establish a positive image—and to reduce the risks of bad publicity from uncovered misbehavior.

3.7

CSR Standards and Practices

ISO 26000 is the recognized international standard body for CSR. The ISO 26000 standards benefit CSR because they provide clarity on an organization’s concepts, terms and definitions related to social responsibility. ISO 26000 intends to assist organizations in contributing to sustainable development. The standards provide insight into trends and characteristics of social responsibility. ISO 26000 therefore aims to integrate, implement and promote socially responsible behavior throughout the organization and in its engagement with its stakeholders. It is important for businesses not only to provide products and services to satisfy the customer, but also to ensure that the business is not harmful to the environment in which it operates. In order for an organization to be successful, the business must be built on ethical practices. Companies are increasingly pressurized to behave ethically. This pressure comes from customers, consumers, governments, associations and the public at large. ISO 26000 was created with this in mind, to provide guidance on the international standards on CSR. It is intended for organizations in both public and private sectors, in developed and developing countries.

20 These standards motivate businesses to go beyond legal compliance, recognizing that compliance with the law is a fundamental duty of any organization and an essential part of their social responsibility. Being trustworthy and transparent, however, increases consumers’ preference for a company and its product or service. The King Report on Corporate Governance (South Africa 2009 – King III) promotes good social and environmental practices as part of good corporate governance. It is closely aligned with the standards for international corporate governance. The JSE (Johannesburg Stock Exchange) Securities Exchange prescribes compliance with King III for listed companies. CSR focuses on achieving economic success through responsible corporate governance in a company’s core area of business. CSR pushes organizations to do better because their actions affect customers, suppliers, employees, shareholders and the community at large. Partnerships with the communities, particularly those that have been disadvantaged, can help companies build productive relationships and stimulate economic growth in disadvantaged areas. Around the world, companies are motivated to make their business decisions more sustainable by applying the principles of CSR within their organizations. Examples include the protection of human rights, drawing up and implementing employment and environmental standards, and minimizing corruption.

3.8

Banking Sector in Bangladesh and CSR Practices

a. Banking Sector of Bangladesh The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system is composed of four state-owned commercial banks, five specialized development banks, thirty private commercial Banks and nine foreign commercial banks. The Nobel-prize winning Grameen Bank is a specialized microfinance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh.

b. CSR in Banking Sector of Bangladesh The modern concept of Corporate Social Responsibility (CSR) is evolving gradually despite several hindrances. Driving forces behind this evolution is pressure from various stakeholders (Importers, Environmentalists) while slow progress is attributed to lack of Good Governance, absence of strong labor unions, consumer forums and above all lack of understanding by business houses, specifically nonexporting ones, that CSR is not charity but is rather an instrumental PR investment. Corporate Social Responsibility (CSR) is gaining fast global acceptance as a standard to assume environmentally sustainable and socially equitable business practices. The role of business world-wide and specifically in the developed economies has evolved from classical 'profit maximizing' approach to a 'social responsibly' approach, where businesses are not only responsible to its stockholders but also to all of its stakeholders in a broader inclusive sense. With increased globalization, local businesses are being integrated with the global economy than ever hence pressure is mounting on local businesses to converge on international

21 standards of socially responsible business. As a member of the global economy, Bangladesh is also aware of the need to take positive initiative to establish an image of environmentally and socially responsible businesses. CSR as a concept is being gradually interwoven into the psyche of local business, however, the process is slow and only in its infancy. In most of the cases, CSR practices are not particularly framed in the context of seeing to that the money being given as corporate donations had been part of a sustaining community development effort.

The banking sector of Bangladesh has been actively participating in various social activities. However, these efforts were hardly recognized and labeled as CSR activities since most of the financial institutions have not integrated CSR in their routine operation; rather these were in the form of occasional charity or promotional activities. Bangladesh Bank has taken initiatives in respect of formalizing CSR in the banking sector of Bangladesh and issued a directive to the banks and, financial institutions on June 01, 2008 in this regard. It defined the strategic objective for CSR engagement, provided some priority areas with a suggestion to foster CSR in their client businesses, and suggested a first time CSR program indicating some likely action plans. Bangladesh Bank will monitor CSR adoption and CSR performance of banks and financial institutions, as an additional dimension of their management performance. Bangladesh Bank also had the opportunity to provide a sense of direction to the CSR agenda of the banking sector when it suggested that, banks which are taking measures for rehabilitating, agriculture, fisheries, livestock, and protecting environment, will be considered as more compliant of Corporate Social Responsibility besides providing relief to the people affected in natural calamities like 'Sidr' and 'Aila'. The banking community has responded sensibly to the call for CSR and sustainable social development. We are also observing a gradual but qualitative change in the CSR action programs undertaken by banks. For example:

• Disaster relief and rehabilitation became the segment where the highest number of banks participated to help case the sufferings of the affected people. In the current context, there is a desired move from the traditionally popular fields of education or health. • Several banks introduced micro-finance for the target groups, such as poor farmers, landless peasants, women entrepreneurs, rootless slum people, handicapped people, etc. • More and more banks have taken long-term or renewable scholarship programs for under-privileged but meritorious students for the persuasion of their studies, instead of providing one-time recognition awards to good performers. • Some banks choose to provide continued financial support for maintaining operating costs of health care organizations. Without a 'governance framework', businesses may face substantial difficulties in finding and maintaining appropriate boundaries for their CSR interventions, and they may find themselves pressured into activities that are beyond their core competence and represent a financial drain on business rather than a sensible CSR investment. The initiative of Management and Resources Development Initiative (MRDI) aiming at proper utilization of CSR funds by means of seeking commitment from the leaders of trade and industry to undertaken target-oriented actions for sustainable social development is appreciable. MRDI has right

22 pointed out that as an alternative development funds, CSR can contribute to poverty reduction and supplement government's efforts towards achieving the millennium development goals. In a developing country like ours with modest resources, it is important that we deploy our resources most usefully, and hence, we should make an effort to have an overall national policy on CSR that starts from building understanding of CSR incentives and pressure points and improving strategic interactions and alignment between public policy goals and the CSR-related activities of businesses.

3.9

MTB Corporate Social Responsibility (CSR) POLICY

Mutual Trust Bank Ltd. (MTB) created a separate Foundation in 2015, solely devoted to the cause of social welfare towards the promotion of CSR objective under the following categories: 1. Education (30%) - MTB aims to nurture the primary education sector mainly in the rural hard –toreach areas. The Bank’s priority for spending the allocated CSR fund in the year 2015 will be the education sector 2. Health and Nutrition (20%)- The second areas of participation for community deployment by the Bank will be Health and Nutrition 3. Others (50%) - The other areas of interest could be disaster relief sports art and culture and environment depending on the need at a particular time.

3.10

Some Recent CSR Activities of MTBL

MTB Honours Successful ABC SSC Examinees Mutual Trust Bank Limited (MTB) recently handed over gift cheques to five (5) residential students of Assistance for Blind Children (ABC) who secured excellent grades in the SSC examination this year. The bank presented the cheques to the ABC SSC examinees, sponsored by the bank, to enable them to use the amount for their admission fees in different colleges of the country. Anis A. Khan, Managing Director and CEO, MTB, handed over the Gift Cheques to the students at a simple ceremony held at MTB Centre, the bank''s Corporate Head Office at Gulshan 1, Dhaka.

MTB extends support to Nepal Earthquake victims Mutual Trust Bank Ltd. (MTB), as part of its Corporate Social Responsibility (CSR) initiatives, recently handed over blankets and tarpaulins to Bangladesh Bank, Rangpur office to help aid the Nepal Earthquake victims. Deputy General Managers, Department of Banking Inspection, Bangladesh Bank, Md. Moffazzal Hossain and Md. Shakhwat Hossain received the relief materials from the Manager of MTB Rangpur Branch, Md. Ifthakhar Hasan at a simple ceremony. Assistant Directors and Deputy Directors of Bangladesh Bank, Rangpur office and senior official of MTB Rangpur branch were also present at the program.

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Mutual Trust Bank Ltd. (MTB) Contributes BDT 1 Crore to "Prime Minister’s Relief Fund" Mutual Trust Bank Ltd. (MTB) Vice Chairman M. A. Rouf, JP along with Q.A.F.M Serajul Islam, Director, is handed over a cheque amounting to BDT one (1) crore to the Honourable Prime Minister Sheikh Hasina, for the Prime Minister’s Relief Fund, at a simple ceremony, held at Gono Bhaban in Dhaka recently.

MTB observes World Environment Day 2014 Mutual Trust Bank Ltd. (MTB) commemorated World Environment Day 2014 through planting trees at vast areas adjacent to Water Bus Terminal at Gabtoli in Dhaka on June 4, 2014, in addition to distributing saplings amongst customers at different MTB branches on June 5, 2014. ''Afforestation is the Future'' (Bonayonei Bhobishshot) was the theme for this noble endeavor. A good number of MTBians along with the local people took part in this initiative.

MTB Contributes BDT 1 Crore to PM’s Relief Fund for Supporting the Families Affected by the Savar Tragedy Mutual Trust Bank Ltd. (MTB) contributed Taka 1 crore to the Prime Minister''s Relief Fund to support and rehabilitate the families affected by the Savar tragedy. Dr. Arif Dowla, Chairman, Mutual Trust Bank Ltd. handed over the cheque to the Prime Minister at a program held at the Prime Minister''s office, on May 14, 2013. Earlier, employees of the bank contributed one day''s basic salary amounting of Taka 10,93,000/- (Ten lakhs ninety three thousand) to the Prime Minister''s relief fund. In addition, on the second day after the Rana Plaza building collapse, MTB provided over 5000 bottles of mineral water for the rescue operators and volunteers.

MTB Donates House Building Materials for Rebuilding of Damaged Houses of the Families Affected By the Tornado at Brahmanbaria Md. Saiful Islam, Manager of MTB Brahmanbaria Branch is seen handing over MTB contribution including a cheque and house-building materials to Nur Mohammad Majumder, Deputy Commissioner, Brahmanbaria, for rebuilding of damaged houses of the families affected by a massive tornado attack on March 22, 2013. Superintendent of police, Brahmanbaria, Md. Moniruzzaman, Additional superintendent of police, Md. Jahidul Islam, and Mayor, Brahmanbaria Pourashava, Md. Helal Uddin are also seen. The tornado caused severe causalities and made many people homeless.

MTB signs MoU with The Daily Star to distribute 1000 copies complimentary for 1-year to meritorious students of University of Dhaka

24 A Memorandum of Understanding (MOU) was recently signed between The Daily Star and Mutual Trust Bank Ltd. (MTB) for promoting knowledge of the students of the University of Dhaka through complimentary daily distribution of 1,000 copies of The Daily Star for next one year. Editor of The Daily Star Mahfuz Anam and MTB Managing Director & CEO Anis A. Khan signed the MOU on behalf of their respective organizations. Vice Chancellor of the University of Dhaka, Professor Dr. AAMS Arefin Siddique hosted the signing ceremony at his office, which was attended by provosts from the halls of residence of DU, heads of different faculties, the Registrar of DU, senior officials of the Daily Star and MTB and large number of students from different departments of DU. Mutual Trust Bank Distributes Clothes to Orphans in Dhaka Mutual Trust Bank Ltd. (MTB) recently distributed clothes amongst orphans in Dhaka. MTB Deputy Managing Director Md. Hashem Chowdhury distributed the clothes amongst the underprivileged orphans of an Orphanage in Motijheel C/A, Dhaka at a simple ceremony held on March 6, 2011 at the Orphanage. Among others, MTB Group Chief Financial Officer Meer Sajed-Ul-Bashar, MTB Group Chief Communications Officer Md. Tauhidul Alam and Junior Assistant Vice President Md. Ariful Haq were present at the event. MTB has been distributing clothes to underprivileged people across Bangladesh since long. In the last winter season MTB distributed warm clothes to cold hit poor people in various parts of the country. Mutual Trust Bank (MTB) Made Yearly Contribution to Two Families Affected By BDR Carnage Mutual Trust Bank Limited (MTB) has, in continuation of its financial support for two families affected by BDR carnage of 2009, disbursed this year's contribution. Prime Minister Sheikh Hasina handed over the MTB cheques to the bereaved family members at a simple ceremony held on February 27, 2011 at Gonobhaban in the city. MTB Founding Chairman Syed Manzur Elahi and Managing Director & CEO Anis A. Khan were present at the event. Mutual Trust Bank Distributes Winter Clothes to Poor Madrasa Students of Rampura, Dhaka Mutual Trust Bank Ltd. (MTB) has recently distributed winter clothes amongst the disadvantaged Madrasha students at Rampura, Dhaka. MTB Deputy Managing Director Quamrul Islam Chowdhury distributed the items to a large number of needy Madrasha students at a simple ceremony held at Rampura, Dhaka. Among others, Head of MTB Infrastructure Division Md. Mahbubur Rasheed, Head of MTB Communications Department Md. Tauhidul Alam, local elite and Madrasha Teachers were present at the event.

25

Chapter- 4 Analysis of CSR Activities of MTBL

26

4.1

CSR activities of Banking Sector in Bangladesh

Total annual direct CSR expenditure of banks increased by Tk. 1424.80 million than the previous year. Table 3: CSR expenditure By Bank (Million Tk.) Year 2010 2011 2012 2013 CSR expenditure 2329.80 2188.33 3046.69 4471.49 Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. All Banks and FIs supported the victims and volunteers of Savar Tragedy by collecting one day salary of the employees of the said institutions, by forming a fund of Taka 1.9 billion by the BAB, ABB & BLFCA, and donating the aggregate collection to 'Prime Minister's Relief Fund. Because of Savar Rana Plaza Tragedy, unlike in preceding years, CSR initiatives of banks in 2013 mainly focused on emergency relief in humanitarian distresses. Besides, focus on i) financial inclusion of less privileged population segments and underserved economic sectors, ii) promotion of health, education and cultural/recreational activities for advancement and well-being of underprivileged population segments, iii) promotion of environment friendly projects, iv) adoption of energy efficient, carbon footprint reducing internal processes and practices in own offices and establishments was going on. Besides continuation and expansion of previous activities in these areas, some newer drives seen in the 2013 CSR reports of different banks included:

Figure 2: CSR expenditure By Bank 2010-2013 (Million Tk) 4471.49 3046.69 2329.8

2188.33

2010

2011

2012

2013

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. Undertaking projects in a village called Southkhali, under Shoronkhola thana of Bagerhat district, for poor individuals and farmers to provide motivational session towards Palm Plantation and distribution of 5,000 Palm Trees free of cost.

27

Construction of extension road at both ends of the bridge connecting 18 villages and stretching more than 6 kilometers from Chatlakanda to Tura via Shoulmari at Roumari upazila under Kurigram district for smooth traffic movement. Besides CSR initiatives involving direct expenditure, all banks participated actively in promoting SMEs and agricultural financing. PCBs were particularly active in these areas. Banks proceeded ahead on multiple fronts including increased rural bank branch presence for broader & deeper financial inclusion, mobile phone banking and opening of bank accounts with Taka 10 as initial deposit for farmers/poor/ultra poor and thereby increasing transactions in these bank accounts.

4.2

Trends of sectorial pattern of direct CSR expenditure

Among all specific categories of CSR expenditure as shown in Table: 4, all banks donated additional financial assistance for the victims of Savar Rana Plaza tragedy in 2013. Table 4: Trends of sectorial pattern of direct CSR expenditure Year 2010 2011 2012 2013 Sectors Humanitarian & disaster relief 460.41 188.03 788.37 1385.83 Education 400.79 612.48 983.69 1295.18 Health 689.07 520.42 435.43 481.68 Sports 265.23 359.07 183.85 384.02 Art & culture 328.91 171.52 213.31 124.75 Environment 59.78 138.07 140.23 106.59 Others 125.58 198.73 301.81 693.41 Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. That is why CSR expenditure in humanitarian & disaster relief sector increased from the previous year but the banks continued to maintain major share in education, health and humanitarian & disaster relief. Education, health, humanitarian and disaster relief contributed to 28.97%, 10.77% and 30.99% share respectively i.e. 70.73% out of total CSR expenditure. Expenditure on sports (8.59%) increased but on Art and culture (2.79%) and environment (2.38%) decreased in 2013. Education sector (28.97%) got the second highest weightage as percentage of total CSR expenditure in 2013 unlike previous years. CSR expenditures of banks in the health sector continued to contribute in establishing hospitals, clinics etc. as well as arranging free health treatment camp, blood donation program etc. in 2013. Banks are paying due attention to gender fairness issues in their internal work environment, recruitment, maternity leave policies etc. and are reporting to BB on gender issues like the previous year’s expenditures

28 of banks as percentage of their after tax profit range from 0.14% to 57.12% . The percentages are in double digits for 12 PCBs and 1 SoCB, which were for 6 PCBs in 2012.

Figure 3: Trends of sectorial pattern of direct CSR expenditure 1600 1400 1200 1000 800 600 400 200 0 2010

2011

Humanitarian & disaster relief

Education

2012 Health

Sports

Art & culture

2013 Environment

Others

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014.

4.3

Mutual Trust Bank Ltd. CSR Expenditure

From 2010 to 2013, Mutual Trust Bank Ltd. contributed Taka 75,884,140 through donations and charities program, primarily directed towards health care, social welfare, supporting educational institutions, research studies, sports to ensure the less privileged a more secure future.

Table 5: MTB CSR Expenditure (2010-2013) Year 2010 2011 2012 2013 Total Expenditure 18,865,000 2,900,000 15,787,140 38,332,000 75,884,140 Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. From ’Figure: 4 MTB CSR expenditure 2010-2013 ’we can interpret that the bank spent Tk. 18,865,000 in 2010 but in 2011 it decreased 2,900,000 Although the bank spent small amount in 2011, it is increased

29 in 2012 Tk. 15,787,140 and in 2013 Tk. 38,332,000 which indicates the increasing trend of MTB CSR expenditure. Figure 4: MTB CSR Expenditure (2010-2014)

38,332,000

18,865,000 15,787,140

2,900,000 2010

2011

2012

2013

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014.

4.4

MTB CSR expenditures as % of after tax profit

Mutual Trust Bank Ltd. contributed 0.71% of their after tax profit in 2011 which is very low. But in 2012 the percentage increased to 4.73% and in 2013 the expenditures of the bank was 6.75% in CSR of their after tax profit. Table 6: MTB CSR expenditures as % of after tax profit Year 2011 2012 2013 Expenditure

0.71%

4.73%

6.75%

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. From ’Figure: 5 MTB CSR expenditure as % of after tax profit ’we can interpret that the bank spent 0.71% in 2011 but in 2012 it increased 4.73%. Although the bank spent small amount in 2011, it is increased 4.73% in 2012 and 6.75% in 2013 of their after tax profit which indicates the increasing trend of MTB CSR expenditure.

30

Figure 5: MTB CSR expenditures as % of after tax profit

6.75% 4.73%

0.71% 2011

2012

2013

Expenditure

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014.

4.5

MTB CSR expenditures in Education Sector

Education plays an important role in shaping not only individual’s career but also prosperity of state. The education helps people to earn recognition and respect in the society. Undoubtedly education is both socially & personally an indispensable part of human life. Table 7: MTB CSR expenditures in Education Sector

Year Expenditure

2011 68.97%

2012 50.36%

2013 28.34%

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014. Figure 6: MTB CSR expenditures in Education Sector

68.97%

50.36%

28.34%

2011

2012

2013

Source: Bangladesh Bank Review of CSR Activities of Financial Sector, June 2014.

31 However the inequalities in the standards of education are still a major issue that needs to be solved as early as possible. The premier Bank which claims itself as one of the leading banks shows little recognition on this sector. From Figure: 6 Investment on Education we can see that it spent very little amount of money on this sector .There is a mentionable expenditure from 2010 to 2012, but in 2013 it shows a growth which is not satisfactory for a large bank like Mutual Trust.

4.6 1. 2. 3. 4.

Findings

MTB has greatest contribution in CSR activities. MTB expended a large amount of their profit as CSR activities. These expenditures are increasing year by year. The practicing area of CSR in MTB is mainly in education, health, Disaster relief, Sports, Social awareness, And Social development. 5. Considering education a most important tool for making any headway MTB places much contribution to education sector. 6. The banking culture and environment is also favorable. 7. MTB extends free medical facilities under its “Rural Health Service Program” to the members of the general public around the rural branches. 8. MTB promotes different donation program for develop the life styles of society. 9. MTB also promotes different socio-cultural and sports activities. 10. MTB is committed to meet the ethical values.

32

Chapter- 5 Recommendation and Conclusion

33

Recommendation Mutual Trust Bank Ltd considers only a few areas where it concentrated its CSR expenditures. The bank should diversify their CSR practices and considered the other important areas of the society, such as 

Women empowerment,



Higher Education



Sanitation in rural areas,



Rural development activities related to the poverty alleviation.

This can ensure the overall development of the country. For this reason, the central bank is monitoring the CSR adoption and performance of banks and also give some directions to the banks and provide some priority areas for CSR practice. It would be helpful if the government created a CSR policy providing guidance on CSR activities. Awareness building Programme would be useful. If there was a greater awareness amongst banks about corporate social responsibility and the kinds of CSR activities they could undertake. Those undertaking CSR must ensure that they are complying with the law in relation to labour rights and any legal obligations they may have in protecting the local community and environment. Institutions must introduce CSR as a course for it to be treated as pure academic discipline, so as to train experts in that area, because when that is done the deprived Communities in the country will one way or the other is developed. Institutions must also collaborate with the multinational companies by sending students on attachment to the multinational companies when it comes to CSR activities because the indigenous companies do not have structured CSR policies.

34

Conclusion As a third world country Bangladesh has lot of problems. Government often find themselves helpless when it comes to solving of these problems. As business owners of this country are considered as a part of the affluent section of the society they can contribute more meaningfully towards of the betterment of the society. If more company came forward to contribute to the society like MTB, it will help to create their social branding as well as helping the society. So we can say MTB is a pioneer in Corporate Social Responsibility because the idea of CSR is vastly expanded by MTB at first. With industrialization, the impacts of business on society and the environment assumed an entirely new dimension. For this, Corporate Social Responsibility has become a criterion of socially lawful business endeavor and the acceptance of it is growing day by day. Countries of developed economy have taken the idea of "Social Responsibility" with that of "Achieving Highest Profit." Through CSR activities corporate organizations can carry out social and philanthropic activities for furthering equitable and sustainable social development. This study has found out that CSR activities so far are merely implemented for maintaining business policy without really nurturing social and generous intentions and social accountability. Most corporate organizations, including sample banks of this study, practice CSR because of their business enlargement or for promoting organizational image and recognition. Although CSR activities have a high potential for societal contribution, so far there has been a very little contribution towards family, society and the nation.

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