Corporate Social Responsibility of First Security Islami Bank Limited

The main objective of this report is to highlight the Corporate Social Responsibility of First Security Islami Bank Limited in Bangladesh. In the Bangladesh society, a few organizations are contributing through their activities on Corporate Social Responsibility (CSR). First Security Islami Bank Limited is dedicated itself towards the welfare of the society. Under the Corporate Social Responsibility the Bank is carrying the social welfare, education, humanitarian help programs, and so on.

 

Introduction

CSR is a crosscutting topic under which numerous issues can be  grouped including training and education, capacity building, leadership, health and safety, working conditions, human rights,

stakeholder engagement and corporate governance. Large multi-national companies were the first to identify CSR as a potential tool to improve performance and now through their supply chain they are asking suppliers to comply to their standards. CSR practice in Bangladesh is a new dimension which is the main focus point of this paper. First Security Islami Bank Limited is dedicated itself towards the welfare of the society. Although FSIBL has no formed a strong  separated  foundation but it does much social-welfare activities. Since then, First Security Islami Bank is carrying the social welfare, education, humanitarian help programs activities and so on, one of the reputed first generation banks in the growing banking sector in Bangladesh. Thus, the title of the study is An Analysis of  Corporate Social Responsibility of First Security Islami Bank Limited”.

Historical Background of FSIBL

First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. The Bank carries banking activities through its Fifty two (66) branches in the country. The commercial banking activities of the bank encompass a wide range of services including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.

Vision of the Bank

To be the unique modern Islami bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust and wealth, quality investment, employee’s value and rapid growth in shareholder’s equity.

Mission of the Bank

The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals:

  • To be the most caring and customer friendly and service oriented bank.
  • To create a technology based most efficient banking environment for its customers.
  • To ensure ethics and transparency in all levels.
  • To ensure sustainable growth and establish full value of the honorable shareholders and
  • Above all, to add effective contribution to the national economy.

Objectives of the Bank

The objectives of the FSIBL are given below:

  • To provide efficient computerized banking system.
  • To enhance foreign exchange operations.
  • To accept deposits on profit-loss sharing basis.
  • To establish a welfare-oriented banking system.
  • To play a vital role in human development and employment generation.
  • To contribute towards balanced growth and development of the country through investment operations particularly in the less developed areas.
  • To establish participatory banking instead of banking on debtor-creditor relationship.

 

Corporate Culture:

This bank is one of the most disciplined Banks with a distinctive corporate. Here we believe in shared meaning, shared understanding and shared sense making. Bank’s people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the bank and needs of the customers who are of paramount importance to the bank. The people in the Bank see themselves as a tight knit them that believe in working together for growth. The corporate culture of bank belong has not been imposed; it has rather been achieved through banks corporate conduct.

 

Human Resources Development

FSIB has a separate Human Resources Division (HRD) to manage the employee policies and practices. As on FYE 2007, Total 421 executives & officers of the bank have been working for smooth banking operations. Bank follows a standardized human resources policy. HRD of the Bank follow a transparent and free & fair system to ensure the standard recruitment, training & development of human resources of the bank. The bank has defined HR policies including recruitment, training & development, promotion, leave, transfer and disciplinary action policy. Usually internal recruitment procedures are considered to fill up the mid and top management positions, while entry-level positions are filled with regularly through competitive recruitment exams. They follow transparent, well-defined and strict rules for appointment of officers and staff in the Bank’s service.

 

Corporate Governance

Corporate governance is about how corporation is running its operations to achieve its corporate objectives. Bangladesh Bank (BB) gives emphasis on implementing corporate governance among the financial institutions and to do that, BB emphasis implementation of the guidelines issued by them for improving corporate governance in banking. Good Corporate Governance practices enhance an entity’s corporate image and market credibility, which attract capital and increase its borrowing power. These can be reflected in the quality of financial reporting and disclosures; strength of internal control system and internal audit function induction of professionally competent, independent non-executive Directors on corporate Board; formation of Audit Committee; delegation of authority to executives and staff; protection of corporate governance for strengthening organizational strength. With a view to ensure effective participation and deep interest in the affairs of the company and as per Articles of Association of the Company and as per Bangladesh Bank Circular No. 16 dated March 24, 2003 the bank has set up the following 2 committee:

  • Executive committee
  • Audit Committee

 

Executive Committee

FSIB has constituted 09 members executive committee of the board as per Bangladesh Bank guidelines to ensure corporate governance in the business of which managing director of the Bank is Ex-officio Member. The executive committee of the board are responsible for developing policy and strategy for smooth operations of business and business development of the bank to ensure maximization of shareholders wealth protecting other stakeholders interest in the company Mr. Alhaj Md. Saiful Alam, Chairman of the board of Directors is the Chairman of the present Executive Committee of the bank. He is very dynamic person and leading the executive committee of the bank in a very manner. 

 

Audit Committee

FSIB has formulated an audit committee can play an effective role in formulating an efficient and secured banking system. The Audit Committee has been formed comprising three members of the Board of Directors. As per corporate governance guidelines the Chairman of the Audit Committee should have sound knowledge and expertise in finance & accounting or auditing. Mr. Hamidul Haq, who is also a Director of the Bank, is Convener of the committee. He is associated in banking field over long years.

 

SWOT Analysis of FSIBL

SWOT analysis means strength, weakness, opportunity and threat analysis of company. Here SWOT analysis of FSIBL bank are given below-

Strength

  • First strength is that it is a sharia based bank.
  • By this time it has established an integral, customer friendly relationship with its clients,
  • It has prominent saving scheme named DPS for a fixed or lower income group of people of this society.
  • It provides services even after the banking hour to special clients.
  • Sound profitability growth and high asset quality.
  • Experienced management.
  • Honest, sincere and dedicated employee competency.
  • Wide market share and stable source of fund.
  • High attention on recovery of overdue amount and or pre-overdue situation. Close monitoring on investment.
  • High attention on individual performance.
  • High attention on making quality investment and disposal of proposals.
  • All the officials are dedicated and honest to serve its own duty.
  • As a whole the human resource is the main capital of the division.
  • Business ethics of the division is similar to the ethics and values of mass people of our country.

Weakness

  • Traditional network system and lack of full scale automation.
  • Lack of required ideas in modern investment products.
  • Poor marketing of investment products.
  • Lack of required information specifically on SME.
  • No growth on carrier advancement. So the employee wants to switch elsewhere.
  • Lack of experienced, competent as well as proficient manpower in almost every department.
  • FSIBL Bank Ltd. does not have an individual marketing department.
  • They have limited advertising strategy on behalf on their bank and accompanied by conservatism rule in this sector.
  • FSIBL Bank Ltd. does not use the share mode of investment.
  • They have no such program to finance to the new entrepreneur or creating the same.

Opportunity

  • Scope of market penetration through diversified investment products.
  • Increasing awareness of Islamic banking among the clients.
  • Scope develops new committed entrepreneurs.
  • Country wide branches having wide opportunities to access in different kinds of business.
  • Service charges in other banks are comparatively higher than FSIBL Bank Ltd.
  • No other banks could provide as much integral working atmosphere as FSIBL Bank Ltd.
  • Bank introduce Islamic card, which is a first time in Bangladesh.

Threats/ Challenges

  • Because of the intense competition, most of the competitor banks of FSIBL Bank Ltd. are coming up with new service line ATM.
  • The competitor banks of FSIBL Bank Ltd. have more geographical coverage than FSIBL Bank Ltd.
  • State law defers with the Islamic Shariah.
  • In the money market of Bangladesh there is no call money system of Islamic Shariah.
  • Some other conventional banks have opened their Islamic banking branch.

 

Corporate Social Responsibility

Be responsible for their activities in the society and thus, continued operation and success of business activities are dependent on compliance of societal expectations and gaining support for continued existence in the society (Alam, 2006).

Stakeholder theory argues that the Corporate Social Responsibility (CSR) refers to operating a business in a manner that accounts for the social and environmental impact created by the business.

CSR means a commitment to developing policies that integrate responsible practices into daily business operations, and to reporting on progress made toward implementing these practices.

In recent years, the popular theories like ‘stakeholder theory’ and ‘legitimacy theory’ have emphasized the importance of ‘social responsibilities of businesses’ in a greater way. These theories are based on the argument that: apart from pursuing the profit maximizing objective, organizations need to corporations should be accountable not only to the shareholders but also to the other multiple stakeholder groups like employees, consumers, government, suppliers, interest groups and the public. In general, a stakeholder can be defined as any group or individual who can affect or is affected by the achievement of the firm’s objectives (Freeman, 1984). Roberts (1992) said:

“..Social responsibility activities are useful in developing and maintaining satisfactory relationships with stockholders, creditors and political bodies. Developing a corporate reputation as being socially responsible through performing and disclosing social responsibility activities are part of a strategy for maintaining stakeholder relationships.”

Another much related theory is legitimacy theory. This theory is based on the idea called ‘social contract’. Legitimacy theory also argues that the business organizations must

Concentrate on the public in total and not just the investors. The society will allow the business organizations to operate only when the organizations will fulfill the expectations of the society.

 

Dimensions of Social Responsibility Concerns of Business:

The notion of CSR has developed very speedily over the last few years in the developed countries. As a consequence, the companies have developed an extensive range of exercises which cover different levels of activities that have an effect on corporate governance, employee relations, supply chain and customer relationships, environmental management, community involvement as well as key business operations. Corporate responsibility covers a number of aspects of the dealings of the business.

Skinner and Ivancevich(1992) argues that consumers, special interest groups, and the general public are aware of business’ impact on the society and demand firms to do more than try to create profits. At present, nearly all managers view social responsibility as a required duty of doing business. Social responsibility provokes many difficult questions for business firms (Skinner and Ivancevich, 1992):

  1. To whom are we responsible?
  2. How far should we go to satisfy our customers and achieve organizational objectives?
  3. Will our decisions affect any segments of our society that we have not considered?

Skinner and Ivancevich also state: “generally we can say that business organizations have an impact on consumers, employees, and the environment and to those who invest in the firm”

According to CPD (Center for Policy Dialogue) Report (2002) on Corporate Responsibility Practices of Bangladesh, the some corporate responsibility issues that are followed by many other countries as well as Bangladesh include Sustainable Development, Business Ethics, Human Rights, Legal Compliance, Corporate Governance, Stakeholders’ Dialogue, Fair Employment, Health and Safety, Labor Standards, Community Relations and, Environmental Responsibilities.

Frost (2001) states that corporate social responsibility can provide opportunities to enhance financial viability and for corporations to be a responsible corporate citizen. This opportunity can be realized through:

Creating new lens for sourcing new business opportunities and in doing so open up new revenue sources from entirely new markets in emerging industries.

  1. Enhancing company reputation through a much more powerful brand and improved stakeholder dialogue.
  2. Fostering new partnerships between business, government, investors and civil society.
  3. Strengthening a position as an employer of choice.
  4. Increasing productivity of staff as they derive deeper meaning and value from the work that they perform, contributing to higher levels of morale and employee engagement.
  5. Influencing positive share market valuation through Global Social Investment.
  6. Allowing innovation in strategies for leadership development and in particular life-long learning, diversity and entrepreneurship.
  7. Gaining more international exposure and affiliations with organizations such as United Nations, and,
  8. Contributing to making the world a better place and achieving long-term sustainability. So, it can be said that, in today’s business world, the social responsibility performance is also getting huge importance along with the financial performance.

 

CSR of First Security Islami Bank Ltd.

Scholarship for Poor and autistics

Recently First Security Islami Bank has provided scholarship  to the poor and autistics. The governor of Bangladesh Bank Dr. Salehuddin Ahmed was the chief guest of this program. The Bank wants to continue this scholarship every year so that this poor students can continue their study.

Computer for School

FSIBL has provided some computer in different school and colleges. At first they start this program at Potya Model public school and college.

Education

  • Donation to Sonatola Pilot High School, Barnamala Adarsha School, DU Management etc.
  • Scholarship/lump grant for poor and Meritorious Students
  • Financial support to Educational Institutions

Relief and Rehabilitation Program

Participation in relief and rehabilitation activities in natural disasters and in emergency forms an important programme of First Security Islami Bank Foundation. During calamities like flood, tornado, tidal surge etc. The Foundation mobilities its own people as well as donates to the relief fund opened at the government level. The Foundation also tries its best to extend hands of assistance and co-operation to the Muslim brethren elsewhere in the world.

As a part of Corporate Social Responsibility Program, First Security Islami Bank Limited donated Tk. 30,00,000/- to the Prime Minister’s Relief & Welfare Fund as donation for Nimtoli and Begunbari tragedy victims. Mr. Md. Abdul Maleque, Vice Chairman, First Security Islami Bank Limited is handing over the payment order to Honorable Prime Minister Sheikh Hasina in a simple ceremony. It may be noted that FSIBL always extended their assistance for the distressed community in various natural calamity.

 

Donation for orphanage and Madrasha

FSIBL has donated 5 lack taka for opening new orphanage for the orphan  madrasha. They have also donated for seed trust and 240000 taka for Anjuman mofidul islam.

First Security Islami Bank Limited with the assistance of Bankers Forum organized an eye camp for the orphans of Dhaka City. In this connection a simple ceremony was organized at the Bank’s Head Office few day. Mr. A.A.M. Zakaria, Managing Director was present on the occasion.

 

FSIBL donated Ambulance

As a part of Corporate Social Responsibility, First Security Islami Bank Limited has donated an ambulance to Baitus Sharaf Shah Jabberia Hospital. Mr. Zahangir Gafur, Zonal Head of FSIBL hand over the ambulance to Mawlana Sheikh Md. Kutubuddin

 

Humanitarian help programs

These hese programmed aims at providing help to distressed people who are unable to meet their basic needs like food, clothing, shelter and medicine. The old widow and children without guardians get preference. Besides, the programmed extends assistance to orphanages, provide fund for the marriage of poor girls, assist indebted people, help distressed wayfarers etc.

 

Liberation war museum

As a part of Corporate Social Responsibility Program, First Security Islami Bank Limited donated Tk. 50,00,000/- for construction of permanent Liberation War Museum. Photograph shows Alhaj Md. Saiful Alam, Chairman, First Security Islami Bank Limited is handing over the payment order to Honorable Prime Minister Sheikh Hasina in a simple ceremony. It may be noted that FSIBL always extended their assistance for the promotion of heritage, culture, education and welfare of distressed community in various natural calamity.

 

Assistance for Cyclone Aila and Cidr Victim

To mitigate the sufferings of Aila victims, First Security Islami Bank Limited has donated Tk. 10,00,000/- only to Prime Minister’s Relief Fund. Mr. AAM Zakaria, Managing Director, First Security Islami Bank Limited handed over a cheque amounting Tk. 10,00,000/- to Prime Minister Sheikh Hasina.

To mitigate the sufferings of Cyclone Sidr victims, First Security Islami Bank Limited has donated Tk. 15,00,000/- only to Prime Minister’s Relief Fund.

 

Assistance for family members of the martyred Army Officers killed in BDR carnage

As a part of Corporate Social Responsibility, First Security Islami Bank Limited has donated Tk. 25,00,000/- only to Prime Minister’s Relief Fund as financial assistance to the bereaved family members of the martyred Army Officers killed in BDR carnage. Alhaj Mohammad Saiful Alam, Chairman, First Security Islami Bank Limited handed over a cheque amounting Tk. 25,00,000/- to Prime Minister Sheikh Hasina on June 10, 2009.

First Security Islami Bank Limited has also donated Tk. 4,80,000/- only to Prime Minister’s Relief Fund as financial assistance to the bereaved family members of the martyred Army Officers killed in BDR carnage. Mr. A.A.M. Zakaria, Managing Director, First Security Islami Bank Limited handed over a cheque amounting Tk. 4,80,000/- to Prime Minister Sheikh Hasina

 

Discussion, Recommendation and Conclusion

Discussion

  1. First security Islami Bank has no activity for rural development.
  2. FSIBL are not so aware about green banking.
  3. No activity for income generating people.
  4. They don’t arrange any tree plantation programme
  5. They don’t have so much activities on the maintenance of public roads.
  6. They don’t have activities on the agriculture.
  7. Lack of advertising.

Conclusion

In the Bangladesh society, a few organizations are contributing through their activities on Corporate Social Responsibility (CSR). First Security Islami Bank Limited is dedicated itself towards the welfare of the society. Although the Bank has no formed a strong  separated  foundation but it does much social-welfare activities. Since then, the Bank is carrying the social welfare, education, humanitarian help programs, and so on.

During various natural disasters, FSIBL came forward with activities for the victims directly and through donating into their. Recommendations will help the bank to improve the service quality in upcoming days.

 

Recommendation:
1. The bank should develop their rural development scheme.
2.They should develop their advertising.
3. They should develop Health and Medicare programs.

4. They should concern about green banking.

5. They should progress and maintenance of public roads.