BRAC Bank has launched a project to research the socioeconomic impact of SME finance on people, planet and profit, in association with the Centre for Corporate Governance and Finance Studies (CCGFS) of Dhaka University.
The research will follow the ‘five action track’ goals of Global Alliance of Banking on Values (GABV), an international consortium of sustainable banks that believe in “value-based banking”.
Mohammad Mamdudur Rashid, deputy managing director of BRAC Bank, a founding member of the consortium, signed an agreement with Prof MA Baqui Khalily, chairman of CCGFS, at the bank’s office in Dhaka yesterday. Muhammad A (Rumee) Ali, the bank’s chairman, was also present.
Members of the global alliance agreed on the five action track goals in their global conference held in Dhaka in April.
The extent to which such financing has impacted the individual, society, the economy and the environment remains unknown, BRAC Bank said in a statement yesterday.
The bank and CCGFS will pair up to research “this vital aspect of banking” for the first time in Bangladesh, the statement added.
The “impact measurement” study will be carried out on the SME customers of BRAC Bank. A team headed by Khalily will do the research.
The CCGFS will develop internationally replicable standard indicators — impact measurement metrics — to measure the impact on SME customers.
The indicators will be presented at the global conference of GABV in Lima, Peru, in 2011. It will then be adopted as a model for similar research in other parts of the world among GABV members in North and South America, Europe, Asia and Australia.
“Bankers must recognise the fact that their financing decisions have very deep impact on the individuals, the community, the environment and of course the economy. It is therefore important that they behave in a responsible manner and are aware of the risks that their decisions can have on all their stakeholders,” said Rumee Ali.
“This study will be small but a significant step in our journey towards banking on value. BRAC Bank has always been working on various initiatives with our triple bottom line or 3Ps [people, planet and profit] philosophy in mind and this project will significantly enhance our knowledge in this area.”
Prof Khalily said: “This research initiative is one of its kind; so far, no such exercise has been undertaken on such a huge scale across the globe to the best of my knowledge.”
“We have disbursed over Tk 13,000 crore in SME financing alone in just nine years; it is time to measure the impact,” said Mamdud. “Someone has to take the brave step. Why not us?”
