Report On:

CSR practices of Sonali Bank Limited.

Submitted To:
Dr. Md. Anowar Hossain Bhuiyan
Course instructor
Legal & Ethical Issues in Business.

Submitted By:
Lagna Tripura
ID: 1930945.

Submission Date:
23rd August, 2020.

Independent University, Bangladesh.

Introduction:
Corporate Social Responsibility (CSR) is a growing concern of businesses now-a-days. It is
believed that as the businesses are making profit from the society, it is every businesses duty to
give something in return to the society through its’ CSR activities. But this perspective about
CSR was not the same in the past. People used to think that every businesses only duty is
toward its’ owners. But this perspective changed over time. Now people think that as
businesses sometimes do some harm to the societies, so it is their duty to solve those
problems. CSR also brings a lot of benefits for a corporation. Opportunities like increased sales
and profits, enhanced access to capital and markets, operational cost savings, improved
productivity and quality, efficient human resource base, improved brand image and reputation,
enhanced customer loyalty, better decision making and risk management processes etc. are the
result of a good CSR practice. So every prominent business organization tries to practice good
CSR activities. In some developed countries, it is obligatory to do CSR. Few governments even
passed some laws to implement CSR activities. Also in Bangladesh, the awareness for CSR is
increasing gradually. Most contributor of CSR in Bangladesh are Multinational Companies and
banks. The purpose of this report is to study the CSR activities and trends of Sonali Bank Limited
(SBL). Banking system is very much related with relationship management practice with its
clients. So when a bank can touch the inner spirit of the people and can provide standard
service, it will more likely to be successful. SBL is no doubt emotionally attached with its
stakeholders and that is a key success factor for it. I will also try analyze probable solutions how
SBL can improve and go beyond its current CSR activities.

Literature Review:
Corporate Social Responsibility (CSR) is a management concept to integrate social and
environmental concerns in a company’s business operations and interactions with their
stakeholders. CSR is generally understood as being the way through which a company achieves
a balance of economic, environmental and social imperatives, while at the same time
addressing the expectations of shareholders and stakeholders. It includes the economic, legal,
ethical, and philanthropic expectations placed on organizations by society at a given point in
time. When CSR is implemented properly in an organization, it can bring along a variety of
competitive advantages such as increased sales and profits, enhanced access to capital and
markets, operational cost savings, improved productivity and quality, efficient human resource
base, improved brand image and reputation, enhanced customer loyalty, better decision
making and risk management processes. Consumers are demanding to know more about
company internal matters. They are no longer satisfied with shady business dealings and hidden
agendas. This shifting of consumers’ psychology is forcing companies to ensure transparency.
Socially responsible companies are investing in green technologies, reducing their reliance on
non-renewable resources, and looking to more sustainable inputs to do business. This has
become a trend as shareholders and also the global community cherish this kind of act of a
company. Investing in green technologies is very cost effective in the long run also. As there are
public benefits from getting involved in local communities, corporate social responsibility
initiatives actively attempt to engage in activities that benefit their local communities as well as
produce profits for the corporation. This sort of activities can also boost employee satisfaction
as they feel like contributing to the society. So, corporations are donating to local nonprofit
organizations, funding to construct things like schools in lower-income neighborhoods, and
becoming engaged with civic issues that affect where they do business. During the holidays,
corporate-sanctioned volunteer events are becoming an emerging CSR trend which events are
allowing employees to volunteer their efforts and make positive contributions to the society
with minimal time commitments. Few organizations are also intentionally recruiting candidates
from difficult economic or educational backgrounds. This activity helps to empower local talents
and brings diversity in the organization which is in terms helping those organizations to ensure
equality. Because of these reasons; increased transparency, investment in green technologies,
local community and employee engagement, and diversity and inclusion initiatives have
become the most popular CSR trends among global corporations. Bangladeshi companies also
do CSR activities. Though, the areas and contribution amount is still very limited in Bangladesh,
CSR contribution is gradually increasing in Bangladesh. But most of the people still thinks CSR
means only philanthropic responsibilities, which resulted in limited area of CSR contribution by
Bangladeshi companies. Most companies don’t even fulfill the economic and legal
responsibilities which are required by the society. For example: the garment industries of our
country don’t even ensure employee safety, despite of their huge amont of revenue. The most
popular CSR areas in this country are- Education, health, social welfare, sports etc. Top
contributors of Bangladesh are multinational companies like BAT, Uniliver, Robi, DBBL,
Grameenphone etc. But more or less, all the banks contribute to CSR activities every year.
Dutch Bangla Bank is the top contributor of CSR in banking industry. About 6.5% of their profit
is spent on different social work and development. Then the Prime Bank Ltd is spending second
highest percentage of their profit in CSR activities. Sahajalal Islami Bank is also gradually
increasing their CSR spending. The banks spend most of their CSR amount in education, health,
culture, sports and social welfare. One of the renowned bank in Bangladesh is Sonali Bank
Limited (SBL) established in 1972 under the Bangladesh Banks (Nationalisation) Order, with a
total of 1225 branches, out of them, 467 are located in urban areas, 746 in rural areas, and 2
are located overseas. It also operates the Sonali Exchange Company Inc. in USA, Sonali
Exchange in Dubai (UAE), Sonali Bank (UK) Ltd., United Kingdom, Hong Kong, (HAR), and
Singapore to facilitate foreign exchange remittances. Core businesses of SBL are Corporate
Banking, project Finance, SME Finance, Remittance, Lease Finance, Consumer Credit, Trade
Finance, Loan Syndication, Foreign Exchange Dealing, International Trade, NGO-Linkage Loan,
Consumer Credit, Investment, Government Treasury Function, Money Market Operation, Rural
and Micro credit, Capital Market Operation, Special Small Loan etc. Vision is “Socially
committed leading banking institution with global presence”. Their mission statement is
“Dedicated to extend a whole range of quality products that support divergent needs of people
aiming at enriching their lives, creating value for the stakeholders and contributing towards
socio economic development of the country”. Sonali Bank Limited (SBL) also spends a
handsome amount of its profit in CSR and also complies with other CSR responsibilities like
economic and legal.
Methodology:
The data sources of this report are secondary. All the data are collected via using internet.
Articles, journals, research papers and circulars have been studied from various websites. Based
on these studies the findings of these report are made, based on which the final conclusion of
this report have been drawn.

Discussions and Findings:

There are four type of CSR responsibilities- economic responsibilities, legal responsibilities,
ethical responsibilities and philanthropic responsibilities. SBL’s performance in each type of
responsibilities are discussed separately.

Economic responsibilities:
Sonali Bank Limited is the most prominent, efficient and widely spread public limited bank in
Bangladesh. Almost all the government official economic activities are done through this bank.
In terms of number of branches, this is the most convenient bank in Bangladesh. SBL takes a
good care of its employees by providing a handsome salary, zero interest loan facilities, pension
funds etc. It also takes care of its shareholders with a consistent positive Earning Per Share
(EPS). Every year SBL generates revenue more than 20 Billion Taka. It also gives a huge amount
of taxes every year. So, despite being a public limited company, SBL is doing very well in the
banking industry of Bangladesh and contributing in the society by fulfilling its economic
responsibilities.

Yearly revenue in crore Taka

3958.6
3176.6
2383.4 2293.7 2172.4

Series 3

Fig: Yearly revenue of SBL.

 Yearly EBIT in Crore Taka
1200

1000

800

600
967.6
400
633.6 578.2
200 339.5

0
2018 2017 2016 2015 2014
-230.3
-200

-400

Column2

Fig: Yearly Earnings before Interest and Taxes of SBL.

Taxes in Crore Taka

450

400 2

350

300

250

200 401.5

150
251.5
100 190.2
50

0 20 21.6
2018 2017 2016 2015 2014

Column1 Series 3

Fig: Yearly paid taxes of SBL.

 Per share value and EPS in Taka
200 190.32
180 175.25

154.54 159.57
160 151.82
140
120
100
80
60
40 31.72
18.68
20
5.61 3.9 1.43
0
2018 2017 2016 2015 2014

Per share value Column1

Fig: Yearly per share value and EPS of SBL.

Legal responsibilities:
SBL strictly follows the legal boundaries in doing business and also complies with the
government laws and regulations. SBL ensures transparency in financial statement disclosure.
Financial statement is audited by a third party organization as per government requirement.
The board of directors are qualified and elected as per company law. The composition of the
board of directors is complied with the Company Act. Annual General Meeting with the
shareholders is also held every year.
SBL also complies with the Basel-III which force banks to act more prudently by improving their
ability to absorb shocks arising from financial and economic stress by requiring them to
maintain a much larger capital base, increasing transparency and improving liquidity. Under
Basel-III accord, SBL ensures minimum 7% capital requirement.

Ethical responsibilities:
SBL performs its ethical responsibilities also. As, it is a public limited company, shareholders are
the owners of this company. So, SBL is obligated to ensure the protection of owners’ capital
from adverse market risks. To manage risk SBL constructed a risk management framework. The
Bank’s risk management framework is applied on an enterprise-wide basis and consists of three
key elements- Risk Governance, Risk Appetite and Risk Management Tools. Using this
framework, SBL tries to control four types of risks that a bank can face- credit risk, market risk,
liquidity risk and operational risk.
Before providing any loans, SBL does some verification check. It is obligatory to cross check the
creditor’s financial solvency. Managers have a power to sanction a limited amount of loan
without authorization. Few managers misuse this power and get involved in unethical
measures. This unethical behavior of few managers is the result of a huge amount of loan
defaults. But overall, SBL follows strict loan policy and communicates transparent loan
processing framework.

Philanthropic responsibilities:
SBL contributes a portion of their profit in philanthropic activities every year. The main three
areas of their philanthropic CSR spending’s are- education, health, Humanitarian and Disaster
Management. Most of SBL’s CSR amount is contributed in these three sectors. But there are
also few other sectors where SBL contributes, like Arts and Culture, self-employment,
Liberation war related sector etc. Generally, 2%-7% amount of the Earnings before interests
and Taxes of SBL are contributed in CSR activities.

Table: CSR spending of SBL in Millions Taka.

2018 2017 2016 2015 2014

Education 3.8 4 4.2 18.80 18.30
Health 6.5 4.65 1.3 9.1 6.8
Humanitarian and Disaster Management 5 2.5 31.9 19
Self-employment 0.2
Arts and Culture 10.8
Liberation War Related 0.5
Miscellaneous 3.7 4.53 5.90 0.4
Total 19 19.45 12.53 65.70 45.2
 % of EBIT in CSR
100%
90%
80%
70%
60%
97 96.4 92.2
50% 98 100
40%
30%
20%
10%
3 3.6 7.8
0% 2
2018 2017 2016 2015 2014

CSR Column1

Fig: SBL’s yearly percentage of CSR in terms of EBIT.

 1. Education:
Sonali Bank Limited is providing scholarships to students, especially for those who cannot
continue their study due to financial constraints as well as to the meritorious and needy
students every year. In 2018, the bank has donated Tk. 3.80 million to 400 poor but meritorious
students who are studying HSC and Graduation level in different colleges and universities of the
country. In 2017, the contribution amount was Tk. 4 million. SBL contributed Tk. 4.2 million, Tk.
18.80 million and Tk. 18.30 million in the years of 2016, 2015 and 2014 respectively.

Educational contribution in %
100%

90%
Fig:
Yearly
80%
CSR
70% 59.51
66.48
71.38
60% 80 79.43

50%

40%

30%

20% 40.49
33.52
28.62
10% 20 20.57

0%
2018 2017 2016 2015 2014

percentage of SBL in education.

 2. Health:
Every year, Sonali Bank Limited provides financial assistance to the insolvent persons for proper
treatment under its CSR activities. Under its health support programs to different segments of
the poor people, the bank donated Tk. 6.50 million in 2018. SBL donated Tk. 4.65 million, Tk.
1.3 million, TK. 9.1 million and Tk. 6.8 million in the years of 2017, 2016, 2015 and 2014
respectively.

% contribution in Health
100%
90%
80%
70%
65.79
60% 76.1
89.62 86.15 84.96
50%
40%
30%
20%
34.21
10% 23.9
10.38 13.85 15.04
0%
2018 2017 2016 2015 2014

Health Column1

Fig: Yearly CSR contribution percentage of SBL in Health.

 3. Humanitarian and Disaster Management:
Like every other organization, Sonali Bank Limited also contributes to the society through its
humanitarian and disaster management activities. Activities like distributing blankets to the
street people in winter, providing aid to flood affected people etc. are the main programs under
this CSR area. The amount of contribution and the type of program varies based on the yearly
circumstances. But on an average 5%-30% of the total CSR contribution is spent in this segment
almost every year.

Humanitarian and Disaster Management %

100%
90%
80%
51.45
70% 57.96
73.68
60% 80.05
50% 100
40%
30%
48.55
20% 42.04
26.32
10% 19.95
0
0%
2018 2017 2016 2015 2014

Disaster Column1

Fig: Yearly CSR contribution percentage of SBL in Humanitarian and Disaster Management.

4. Self-employment:
SBL also contributes in self-employment sometimes under its’ CSR program. In 2014 it
contributed an amount of Tk. 0.2 million for this cause.
 5. Arts and culture:
As a contribution area, art and culture is not that much popular in SBL. But it do contributes in
this sector sometimes. In 2017 SBL contributed an amount of TK. 10.8 million for arts and
culture under its CSR program.

6. Liberation war related:

SBL donated Tk. 0.5 million in 2014 to the needy families of the liberation war martyrs.

7. Social welfare & Miscellaneous:

Sonali Bank Limited donates millions of Taka in miscellaneous areas like sports events,
sponsoring concerts, beautification of roads and highways etc.

Miscellaneous contribution in %
100%
90%
80%
70% 63.85
60% 80.53
91.98
50% 100 98.72

40%
30%
20% 36.15
10% 19.47
8.98
0% 1.28
2018 2017 2016 2015 2014

Miscellaneous Column1

Fig: SBL’s % CSR contribution in miscellaneous events.

Conclusion and recommendation:
Based on the findings of this report I have found some major lacking of SBL for which I have
given some recommendations.

 SBL is doing very well with its economic and legal responsibilities. But the performance
is poor in both ethical and philanthropic responsibilities.
 The amount of CSR contribution is not good enough. Such an old and prominent bank
with such a huge yearly revenue and profit contributing so less in CSR is not delightful to
see. SBL should increase their contribution in CSR.
 The CSR contribution percentage is decreasing every year in terms of EBIT. Though, their
revenue and income are gradually increasing, their CSR contribution amount is
decreasing. SBL spent Tk. 4.5 crore in 2014; which is not a great amount itself; and
reduced the amount to Tk. 1.9 crore in 2018. But the contribution trend should be
upward, not downward.
 CSR contribution percentage is not static. A certain percentage of EBIT should be
contributed in CSR and more than 10% contribution would be appreciable.
 SBL has no major contribution in environment. They should start spending their CSR
amount for environmental causes like tree plantation, local community cleaning,
recycling etc.
 Discontinuation of good CSR programs like self-employment. In 2014, SBL contributed in
self-employment and then abandoned it the next year. But it should have been a great
CSR program if continued.
 SBL is performing poorly in its ethical responsibilities. That’s the reason why 2015
Hallmark scam happened. A scam loan of Tk. 3400 crore was given by one branch to
Hallmark group and SBL made a huge loss that year. SBL should increase its ethical
boundaries.
References:

 Crane, A.; Matten, D. (2004). Business Ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford university press.
 2018 Annual report of Sonali Bank Limited. Retrieved from
https://www.sonalibank.com.bd/PDF_file/annualreport/2019/Annual_Report_2018.pdf.
 2018 Auditors report financial statement. Retrieved from
https://www.sonalibank.com.bd/PDF_file/financialreport/2018/auditors_report_financial_state
ment_2018.pdf.
 2017 Auditors report financial statement. Retrieved from
https://www.sonalibank.com.bd/PDF_file/financialreport/2017/Auditors_report_financial_state
ment_2017.pdf.
 2016 Auditors report financial statement. Retrieved from
https://www.sonalibank.com.bd/PDF_file/financialreport/2016/Auditors_report_financial_state
ment_2016.pdf.
 2015 Auditors report financial statement. Retrieved from
https://www.sonalibank.com.bd/PDF_file/financialreport/2015/Auditors_report_financial_state
ment_2015.pdf.
 2014 Auditors report financial statement. Retrieved from
https://www.sonalibank.com.bd/PDF_file/financialreport/2014/SBL-Fin&AdtRep-2014.pdf.
 https://en.wikipedia.org/wiki/Sonali_Bank
 https://www.sonalibank.com.bd/index.php
 https://www.unido.org/our-focus/advancing-economic-competitiveness/competitive-
trade-capacities-and-corporate-responsibility/corporate-social-responsibility-market-
integration/what-csr
 https://www.investopedia.com/ask/answers/011215/what-are-top-trends-corporate-
social-responsibility.asp#:~:text=Some%20of%20the%20most%20popular,and
%20diversity%20and%20inclusion%20initiatives.
 https://en.wikipedia.org/wiki/Hallmark-Sonali_Bank_Loan_Scam#:~:text=The%20loan
%20scam%20occurred%20when,of%20credit%20to%20fictitious%20companies.