Banks Slash CSR Spending by Nearly 40pc Amid Mounting Financial Stress

Bangladesh’s banks have sharply scaled back their corporate social responsibility (CSR) spending as mounting bad loans, capital shortfalls and rising operating costs squeeze their financial position, with expenditure plunging by nearly 40 per cent in just six months.

The country’s 61 banks spent Tk119 crore on CSR activities during January-June this year, down from Tk198 crore in July-December 2025, according to the latest Bangladesh Bank report. The Tk79 crore reduction represents a 39.83 per cent fall in spending in six months.

CSR expenditure also dropped by around Tk31 crore, or 20.66 per cent, compared with the corresponding period of the previous year, reflecting the growing financial strain confronting the banking industry.

Spending on education, healthcare, environment and climate-related programmes all declined sharply during the period, raising concerns about the ability of banks to maintain their social commitments amid worsening balance-sheet conditions.

People familiar with the banking sector said the decline is largely attributable to losses suffered by several banks and a broad deterioration in profitability.

They warned that CSR spending is unlikely to recover significantly unless banks can restore their financial health through stronger governance, recovery of defaulted loans and improved profitability.

“Banks first need to regain financial strength by containing non-performing loans and improving governance. Only then can CSR spending return to a sustainable level,” sector insiders said.

Under Bangladesh Bank’s CSR policy, banks are required to allocate at least 30 per cent of their CSR expenditure to education and another 30 per cent to healthcare. A further 20 per cent is earmarked for environmental protection and combating climate change.

The remaining 20 per cent can be spent on income-generating activities, disaster management, infrastructure development, sports and entertainment.

The latest figures, however, show that banks’ actual spending fell well short of the policy’s intended priorities in several areas.

The largest share of CSR spending during January-June went to the ‘other’ category, amounting to Tk48.53 crore, or 40.77 per cent of total expenditure.

Healthcare received Tk34.66 crore, accounting for 29.11 per cent, while education received Tk24.13 crore, or 20.27 per cent. Spending on environmental protection and climate change stood at just Tk11.72 crore, or 9.84 per cent.

The contraction was particularly severe in environmental spending, which plunged by 59.99 per cent compared with the previous six months.

CSR spending on education fell 45.74 per cent, while healthcare expenditure declined 39.74 per cent over the same period.

In contrast, spending under the ‘other’ category increased by 3.70 per cent, indicating a shift in the composition of CSR expenditure as banks came under increasing financial pressure.

Private commercial banks continued to dominate CSR spending. Of the country’s 43 private commercial banks, 33 spent Tk103.70 crore, accounting for 87.11 per cent of total banking-sector CSR expenditure.

Six foreign commercial banks spent Tk12.91 crore, representing 10.85 per cent of the total.

State-owned banks contributed only Tk2.31 crore, or 1.94 per cent, with just two of the six state-owned banks reporting CSR expenditure. Three specialised banks spent a mere Tk11 lakh, equivalent to 0.10 per cent of the banking sector’s total.

Shariah-based banks accounted for Tk18.36 crore, or 15.38 per cent of total CSR spending during the first six months of the year.

A striking feature of the data is the source of funding for CSR activities by these banks. Of the Tk18.36 crore spent by 10 Shariah-based banks, only Tk5 lakh came from net profit after tax for 2025.

The remaining Tk18.31 crore, or 99.74 per cent, came from other sources, highlighting the increasingly complex financial position of some banks and the changing structure of CSR funding.

Meanwhile, 35 financial institutions spent Tk1.85 crore on CSR activities during the period.

Healthcare received the largest share of their CSR expenditure, with Tk77.49 lakh, or 41.85 per cent, followed by education at Tk56.50 lakh, or 30.51 per cent.

Financial institutions spent Tk30.87 lakh, or 16.67 per cent, on environmental protection and climate-related programmes.

The sharp fall in CSR spending comes at a difficult time for Bangladesh’s banking sector, which is struggling with a massive accumulation of non-performing loans, provisioning shortfalls and capital erosion.

Bankers and economists say restoring financial discipline and profitability will be crucial not only for strengthening the banking system but also for ensuring that banks can continue to play a meaningful role in supporting social and environmental development.

They stressed that CSR should not become a casualty of the banking sector’s current crisis, but acknowledged that sustainable social spending ultimately depends on financially sound institutions and effective implementation of Bangladesh Bank’s CSR guidelines.