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Socially Responsible Business Approach

Discuss About The Corporate Governance Practices Bangladesh?

A socially responsible business (SRB) is a business whose aim is to create positive transformations in the society and contribute to its stakeholders including the local community along with its focus on profit maximization. The SRB is a profit oriented as well as it is socially accountable. It targets not only to gain financially but also aims to develop the wellbeing of the community (EY, 2015).

Through SRB, the company can involve with the community in which it operates. It directs the company to minimize the hazards of its activities on the community and to contribute positively to the society. SRB assists the company to create a market space for itself. The company can form partnerships and alliance with the local community and team up with the NGO to fulfill its mission. It is a socially responsible activity and aims to create a long term relationship with the society (Mahmud & Ara ,2015).

  1. General Electric: The GE foundation donated $88 Million to community and educational programs in 2016. The employees and retirees had also contributed through the organization’s matching gift programs. Also, the company’s Developing Health program aims at providing medical facilities around the world.
  2. Deloitte: The organization is committed to create a societal change and environmental sustainability working along with government and non-profit organizations. It motivates its employees to contribute to pro bono work (Ferrell, Fraedrich & Ferrell, 2016).

As the vision of Grameen Bank states, ’Banking for the Poor’ and its mission statement is to provide financial services to the poor for enabling them to realize their potential   and bring them out from the vicious circle of poverty. It is focused towards empowering the poor especially women (Grameen Foundation, n.d.)

Grameen Bank is a bank which provides microfinance to the poor and downtrodden.  It supports the development of the community and grants small loans to the poor without any collateral security. It was founded in Bangladesh in 1976 by Professor Muhammad Yunus. It has created a system free from collateral which is opposite to the conventional banking practices. Its mechanism is based on mutual faith, responsibility, participation and creativity. It serves as a promoter in the development of the socio economic conditions of the poorest of the poor in Bangladesh.

For its “Low -Cost Housing Program” the bank won the World habitat Award in 1998. In 2006, the bank along with its founder jointly won the Nobel Peace Prize. So, with its focus on the  development of the financial, agricultural and health services by using digital technology to upgrade the lives of the poor, especially women , it can surely be called as a  ‘Socially Responsible Business Enterprise’ (Grameen Bank, 2018).

An ethical dilemma or ethical paradox occurs when the individual has to select between two unfavorable alternatives. It is a decision making problem being two possible moral options neither of which are acceptable or preferable. The complication arises when opting for one solution would result in contravening other.

Grameen Bank: A Case of SRB

There are certain features of ethical dilemma. Conditions when the individuals have to select the best course of action can be called as ethical dilemmas. Secondly, there must be a various course of actions to choose from. Thirdly, no matter which course of action is opted, some ethical principle is compromised. Thus, ethical dilemma has various options to choose from and it has multiple and undefined outcomes. It is not an easy choice to select between right and wrong (Mahmood & Islam, 2015).

The ethical dilemma can be explained with the help of some examples. When the social worker with the expertise of mental health care services, in a village is confronted by the client who is suffering from agoraphobia, an anxiety disorder with a fear of open and public places. If the clinician denies treating the patient on the ground of incompetence, it would create an ethical dilemma with his commitment to boost the wellbeing of the clients. In this case, the ethical paradox can be resolved by accepting the case and treating the patient by training himself in this area (Sustainable Development Knowledge platform, 2017).

Certain allegations were claimed against Grameen Bank and its founder that he treated the bank as his personal property and used it to generate income for himself .Also, Dr. Yunus was accused of averting huge funds to a business and using the brand name of Grameen for developing many businesses. They claimed that the bank is sucking blood from the poor by charging interest rates as high as 30%.

But in reality, the rates of interest on microfinance loans were less than 20%. The Grameen Bank offered loans at different interest rates which are as follows:

  1. Income generating loans were charged at 20%.
  2. House building loans were charged at 8%.
  3. Educational loans were charged at 5% (payable after completing the education).
  4. Loans to economically struggling family were granted at 0% (Grameen Bank, 2016).

So, the bank and its founder were faced with the ethical dilemma and allegation of diverting the bank’s funds and charging higher interest rates than the Private Commercial Banks (PCB).The PCBs charged around 14 % on their loans. On the contrary the Grameen Bank charged 20% on the income generating loans. However, the income generating loans were structured for the economically rich classes which were capable to borrow the loans from PCBs as well. But it charged 0% interest from the economically backward classes which fulfilled its vision of ‘Banking for the Poor ‘(Adair & Berguiga, 2015).

Bangladesh has a strong political governance framework in the areas of financial management, fiscal reporting and watchdog institutions.  Programs such as Strengthening Public Expenditure Management Program (SPEMP) and Bangladesh Local Governance support Project (LGSP) have been strengthening the financial management reforms and audit capacity of the banking institutions. 

Understanding Ethical Dilemma

According to Habib (2016) in December, 2010, Dr. Yunus was accused of averting the funds to the other businesses and using the brand name of Grameen to develop other businesses. It affected the governance of Grameen Bank after this ethical dilemma.

The Bangladesh Government formulated a committee to monitor the activities of the bank. The Finance Minister of Bangladesh Mr. A.M.A. Muhith claimed that Dr. Yunus whose age was 70 at that time, should hand over the administration of the bank to others. He argued that as per the country’s banking rules, the retirement age of executives is 65.

As a result, Bangladesh Central Bank passed an order to remove Dr. Yunus from the post of Managing Director, as he has crossed the retirement age. The High Court also rejected his writ petitions claiming the legality of the Central Bank’s action. The appeal is pending before the Supreme Court (Adamek, 2014).

Corporate Governance can be defined as the mechanism which is able to recognize the basic values of society such as economic, political and socio-cultural including the human rights. The political governance of Bangladesh can be improved by implementing the components of Good Governance in the following ways:

  1. All the citizens of the country should have the right to participate in the decision making process directly or indirectly through intermediaries which represent them.
  2. The public representatives should have a broad and long term perspective on good governance.
  3. The institutions and processes should be able to serve the stakeholders and must be capable to meet the necessities while making the best use of resources.
  4. The decision making authority in the government and the public sector should be accountable to the public.
  5. All the citizens irrespective of their gender should be able to improve their living standards .The laws and regulations should be fair and applied impartially (Hossain, Enam & Hasan, 2017).

The principles of Corporate Governance to be applied for improving the governance of Grameen Bank are as follows:

  1. The bank should follow the rules and regulations framed for the administration of microfinance organizations by the government of the country.
  2. The information regarding the decision making should be easily accessible to those who are affected by such decisions and enforcements.
  3. All the members of the bank should feel that they have a share in the bank’s performance and decision making.

In order to achieve good governance and to ensure sustainable human development, actions must be taken to make it a reality (Hudon   & Sandberg, 2013).


Adair, P. & Berguiga, I. (2015).The interest rates and performance of MFIs in the MENA region: is there a moral issue? Ethics and Economics, 12(2).

 Adamek,J.(2014).Ethics of Microfinance in  the Perspective of Profit as the Element Influencing Microloan Interest Rate – Selected Problems. Finance and Accounting – Theory and Practice, 351.

EY (2015). Client protection in microfinance the current state of law and regulation. Retrieved from$FILE/EY-client-protection-in-microfinance.pdf  on 11th February, 2018.

Ferrell, O. C., Fraedrich, J. & Ferrell (2016). Business Ethics: Ethical Decision Making & Cases. Cengage Learning.

Grameen Bank(2016) Annual  R e p o r t  2016. Retrieved from  on 11th February, 2018.

Grameen Bank(2018). Introduction.  Retrieved from on 11th February, 2018.

Grameen Foundation (n.d.). Mission. Retrieved from on 11th February, 2018.

Habib, H. (2016). Bangladesh: crisis of the Grameen Bank. The Hindu. Retrieved from  on 11th February, 2018.

Hossain, M. Z., Enam, F. & Hasan, M.R.(2017). The Role of Corporate Governance and Corporate Social Responsibility Practices in Organizational Excellence: The Case of Grameen Bank. Open Journal of Business and Management, 5, 119-130.

Hudon,M.  & Sandberg, J.(2013).The Ethical Crisis in Microfinance:  Issues, Findings, and Implications. Business Ethics Quarterly, 23(4), 561–589.

Mahmood, R. & Islam, M.M. (2015).Practices of Corporate Governance in the Banking Sector of Bangladesh. International Journal of Managing Value and Supply Chains,           6(3), 17-29.

Mahmud ,S. & Ara , J.(2015). Corporate Governance Practices in Bangladesh: An Overview of its Present Scenario in Banking Industry. International Journal of Economics, Commerce and Management, 3(12), 408-425.

Sustainable Development Knowledge platform (2017). A New Transformation Path. Retrieved from  on 11th February,

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