Localidad 1, Depresión Momposina (El Banco)

6. Findings and Analysis:

Rupali Bank Limited has taken vast initiatives to perform CSR activities since 2010.RBL is incurring its CSR expenditure directly from its own budget. There is no separate entity established as foundation or trust supported by contribution from CSR expenditure allocation of the bank concerned to incur CSR expenditure.

6.1 Promotion of Financial Inclusion:

Rupali Bank enthusiastically participated in BB’s financial inclusion drive including lending to SMEs, Credit support to young farmers, opening and operating accounts for farmers, unemployed youth and hardcore poor, providing wholesale credit facilities to different micro credit institutions, providing Bank-NGO linkage credit facilities to NGOs, disbursing credit in establishing solar-energy and bio-gas plant in rural areas. These initiatives entail modest indirect impact on earning level of the RBL to the extent of forgone income differential, if any, relative to other available investment options. In the longer run however, these forgone income are likely to be more than made up by the larger income potential from the broadened and diversified customer base.

6.2 Ingraining CSR practices within the organization & client

businesses:

In accordance with the BB guidance circular suggestion on ingraining environmentally and socially responsible practices within the organization

RBL has reported having taken steps for adoption of socially and environmentally responsible practices in their own internal operations. RBL has adopted socially and environmentally responsible practice in its internal operations and provided a modern, healthy and safe work place and created a learning and development environment, ensured compliance of regulatory environmental and social requirements.

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.3 Initiatives to adopt green banking policy:

RBL is now at Phase-1 of green banking according to the Policy Guidelines of BB. The bank has only covered few of its in-house performance and many of the green banking activities of Phase-1 like green finance, green marketing, climate risk fund, reporting green banking practices are yet to be adopted.

6.4 Tax rebate for CSR:

RBL renders various CSR activities according to the regulations prescribed Bangladesh Bank. This bank has been performed CSR practices since 2010 and RBL’s income tax assessment has been finalized up to 2002 and case pending for the year 2003 to 2008. Income tax return of 2009 has been submitted but assessment has not been completed. As, the bank has performed its many CSR activities in accordance with Bangladesh Gazette [new SRO No. 229-Ain/Aykar/2011, dated 04.7.2011 u/s 44(4) (b)],

but some CSR activities undertaken by RBL are not included in the areas of getting tax concession in accordance with the regulation.

They are:

CSR activities Amount of

Expenditure

Beautification of Park Tk. 50000

Sponsorship(Janakantha Family Day) Tk. 80000

“Sheikh Rasel Sishu Kishore Parisad”- For arrangement of Cultural program & Art competition (assumed that this organization is not approved by Government)

Tk. 25000

Celebrating the Birthday of Rabindranath Tagore Tk. 50000

Allowable CSR expenditure for tax rebate=

(Total direct CSR expenditure- Unallowable CSR expenditure) =Tk.25348000-Tk.205000

=Tk.25143000

So the tax rebate is Taka 2514300(Tk. 25143000*10%)

The above tax rebate is calculated on the basis of CSR activities following the guideline. But it totally depends on National Board of Revenue after the assessment of Income tax return and CSR activities of RBL.

6.5 Problems of tax disincentive:

As there is a provision of getting 10 percent tax rebate by donating to the institutions or authorities approved by the Government according to the Bangladesh Gazette, but there is a possibility of not getting the tax benefit, if any CSR is not considered by NBR as allowable expenditure. The company’s tax liability will be affected by this unallowable expenditure and the company will be deprived of getting tax concession.

According to the CSR activities: AY 2011-2012, [new SRO No. 229-Ain/Aykar/2011, dated 04.7.2011 u/s 44(4)(b)], some CSR activities of RBL such as beautification of ‘Boishakhi Park’, donation to ‘Sheikh Rasel Jatio Shishu Kishore Parishad’, sponsorship to ‘Janakantha Family Day’, contribution to celebrate the150th _{birthday of} Rabindranath Tagoreand are not eligible to get tax rebate and RBL will fail to get tax incentive in the above mentioned areas.

6.6 Branding of Rupali Bank Limited:

Many CSR activities like arrangement of big games and sports, observance of different national and international days, sponsorship of big events are a major source of branding of RBL because there is a close link of CSR with brand promotion. RBL’s taking part in the beautification program of ‘Boishakhi Park’, providing sponsorship to the University of Dhaka and University of Rajshahi helped to increase the bank’s brand image broadly in the society.

6.7 Reporting of CSR initiatives:

Rupali Bank Limited has reported the CSR activities in separate chapters of their annual report in accordance with CSR guidance circular issued by Bangladesh Bank. RBL has provided details of their programs in its report but did not make proper disclosure of direct CSR expenditure. The quantitative amount of CSR expenditure was gathered from Central Accounts Division of RBL, The bank has also included future plans in the chapter on CSR activities.

Rupali Bank Limited has not issued any separate report of its CSR programs and activities. This bank reported CSR program adoption by decisions at board of directors level; there is no practice of stakeholders consultation in drawing up or implementing CSR programs.

6.8 Gap Between the amount of direct CSR expenditure:

According to the Review of CSR initiatives in banks (2010) by Bangladesh Bank, July 2011, the direct CSR expenditure in 2010 reported by RBL is Taka 16,700,000 and the actual CSR expenditure by RBL in 2010 was Taka 25,348,000.This is a huge gap between actual expenditure and reported expenditure. This huge gap that might be caused by lack of proper communication and information.

6.9 Staff welfare:

RBL has included Retirement Benefit Scheme such as Contributory Provident Fund (CPF) Scheme, General Provident Fund (GPF) Scheme, Pension Fund and General Provident Fund as a part of CSR activities. These welfare funds are created from the contribution of employees/workers and employers. These funds are part of employee benefits. RBL has reported it as CSR because the bank thinks that charity begins at home and these help employees to maintain a sound life.

Besides training facilities, performance recognition program and rewards etc initiated by RBL is helpful to ensure a modern, healthy and safe workplace for its employees that assist on ingraining CSR practices within the organization & client businesses.

Recommendations and