Banking is one of the source of financing. Green Banking is a term that refers to promotion of environmentally friendly practices that allow Banks and their clients to maintain their financial activities while keeping in mind the management of environmental risks as well as reducing their carbon footprint and related socially adverse actions. It aims to making Banking processes, use of IT and physical infrastructure more ecological and efficient with minimum damage to the environment.
Green banking plays an essential role in keeping banking sustainable. Businesses are the driver of the economy, and sustainable business can influence the sustainability of the economy; therefore, successful green business establishment is crucial. Central banks’ role is imperative in introducing and implementing green banking. Green banking is related to Maqasid Shariah as well as sustainable development goal. On the other hand, green banking features and objectives are very close to Maqasid Shariah. The objective Islamic law is known as Maqasid Shariah.
During the last few months, COVID-19 has forced the human race to reconsider their everyday practices and that is the reason many people are making changes to their daily lives to adjust to the new normal. During this time, the digital tools have emerged as savior by keeping people safe and helping global economy survive. From education to shopping, from health services to gatherings; everything has gone digital.
Mostly Pakistan’s banking sector works through a chain of physical branches which operate on paper and cash based systems. Green Banking is an integral dimension for green economy all over world. Majority of the Pakistan banks are in the initial stages of Green Banking adoption which requires the development of paperless banking operations through various digital banking practices. Green Banking involves the use of internet banking, mobile banking, ATMs and other alternative delivery channels to perform banking operations. Green baking trend in relatively new in Pakistan, as the country is running on cash based economy and only limited number of people use digital payment options. Cash is one of the source of spreading corona virus in the country making bank branches hotspots for the spread of infections. Now, the State Bank of Pakistan (SBP) has directed the banks to clean, disinfect, seal and quarantine all currency notes issued to the customers. This will incur a large amount of additional cost to the banking industry which could have been reduced if banks had a strong online infrastructure. Most of the pensioner accounts are in the state owned financial institutions which have very limited digital banking services for its customers.
It is the dire need of time for the country to up their digital Banking game. Banks should provide online facilities for various daily banking operations such as account opening, credit card application, financing approval for corporate clients, etc. The provision of various Green Banking services such as ATMs in central areas, mobile applications for performing banking transactions or utility bills payment can facilitate customers in the present scenario. Customers should be encouraged to use digital banking instead of visiting bank branches. This will benefit the banking industry in the long run by decreasing various operating costs associated with daily banking operations. The SBP has taken various digital measures such as totally automating Regulatory Approval System (RAS) for foreign trade transactions and online National Financial Literacy Programme for the Youth etc. More concrete actions are needed by the SBP for promoting Green Banking as this the only way we can stay safe without risking our work.
by: Abeer Arshad
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