Sustainability Reporting
The Bank is committed to investing more in the form of green financing, climate change, and
digitization to minimize the carbon footprint of the Bank’s operations.
The Bank’s focus aligns with various Sustainable Development Goals (SDGs) 2016-2030.
The Bank has forged partnerships and collaborations with institutions involved in the sector of
Sustainable Banking and enhancing access to finance.
3Ps for Sustainability
People
The Bank is committed towards the social aspect of sustainability, including the well-being of customers, employees, community, and the society at large. The Bank prioritizes customer satisfaction, fair treatment of employees, community engagement, inclusive financial services and promotion of diversity and inclusion within the Bank. The Bank is equally committed to contribute for the empowerment of women and deprived sector.
The Bank provides direct employment to 1970 staffs and spent NPR 28.88 million in training and development during FY 2022/23. The Bank conducted 204 training programs and felicitated 21 employees for being associated with the Bank for more than 15 years. In the FY 2022/23, the Bank promoted 215 staffs based on merit, while 980 employees have been availing home loan facilities from the Bank.
The Bank spent NPR 21.98 million under different CSR initiatives falling under different Sustainable Development Goals (SDG 3,4,5,9,15) in FY 2022/23. The Bank provided loans for women entrepreneurs amounting to NPR 2052.84 million, loan to deprived sector amounting to NPR 10,047.41 million during the same period. The Bank operates 123 Branchless Banking unit in remote areas for enhancing access to finance and to contribute to sustainable development of communities.
Planet
The Bank has emphasized environmental sustainability as one of its corporate conscience and over the years has aligned its business and operations to protect the environment and preserve the planet. The Bank largely focusses on reduction of carbon footprint from its operations; reduction in energy consumption & paper usage, investment in green energy, lending to hydropower projects and investment in digitization to reduce environmental implications.
The Bank has achieved substantial reductions in paper usage and customers footfall in branches through use of digital channel for internal operations and customers service respectively. Further, the Bank has been operating 173 branches through use of solar power. Further, around 6.80% of total loan exposure of the Bank is in hydropower sector for electricity generation.
The Bank has conducted various tree plantation programs around the country, provided financial support for park construction, conducted cleanliness programs at local levels, provided financial support for waste storage, and has conducted awareness through social media regarding the adverse effect of single use plastic.
The Bank is committed to support our customers’ transition towards lower-carbon business models.
Profit
Siddhartha Bank ensures that its operations are profitable not just in the short term, but also in the long term. The Bank ensures consideration of the environmental, social, and governance (ESG) aspects in its pursuit of profits. The Banks adopts sustainable business practices that generate profits while minimizing negative impacts on society and the environment. The Bank earned NPR 3.17 billion as net profit during current fiscal year with a tax contribution to government of NPR 2.98 billion.
Environment and Society
Environmental and Social Obligations,
Initiatives and Practices
Environmental and Social Obligations, Initiatives and Practices
Global warming and climate change are already affecting Nepal’s gross domestic product. Increased flooding, heat stress on labor productivity and health, and heat stress on crops and livestock are expected to be a continual drag on growth. Further, Nepal was ranked 162 out of 180 countries for the Environmental Performance Index, 178 out of 180 countries for air quality, 110 out of 180 countries for Biodiversity, 158 out of 180 countries for climate change, in 2022, and virtually all of the population is exposed to unhealthy levels of air pollution, massive destruction of biodiversity and climate change. Nepal has pledged to achieve net zero emissions by 2050 and to significantly scale up hydropower investment, and use of EVs in the private and public transportation sectors in the coming decade.
The Bank has been taking environmental and social initiatives through its operational activities, CSR, and lending activities. The Bank has been proactively taking measures such that the Bank can contribute to environmental sustainability. The Bank has emphasized sustainability as one of its corporate conscience and over the years, has aligned its business, operation, function, and CSR activities considering the Sustainable Development Goals (SDGs) to promote sustainable development, create long-term value in society, and build a more resilient and sustainable future for all.
The Bank has made substantial investments in technology, environmental & social risk management through the formation of an independent unit and focuses on being a Digital First Bank for Sustainability. The Bank is aware of the fact that with the adoption of digital banking, and recognition of climate change as a major risk for the Banking industry the carbon footprint involved in the banking activity can be substantially reduced.
- The Bank’s Mobile Banking application Siddhartha BankSmart XP enables customers to obtain required information and carry transactions from the applicant. It prevents frequent traveling or the use of paper vouchers. More than 18.47 million transactions were carried out through the BankSmart App in the last FY.
- The Bank discourages the use of paper vouchers and encourages transactions through different digital platforms (ATM, BankSmart). During FY 2022-23 around 42.05 million transactions were initiated without the use of any paper voucher for payment and fund transfer.
- The Bank has a QR code system for fund transfer which has again same environmental benefits. 3.95 million transactions were initiated through QR code for FY 2022-23.
- The Bank focused and increased the use of other alternative channels (IPS, CIPS, RTGS) for increasing digital transactions to decrease branch footprints and achieve positive environmental benefits. Around 5.26 million transactions were initiated through alternative channels for high-value transactions amounting NPR 3.30 trillion
- The Bank has already adopted paperless PIN for its ATM cards whereby customers are provided with PIN cards on their authorized mobile numbers vide OTP notifications instead of individual sealed paper PIN cards.
- The Bank has an intranet service to get the necessary information and internal functions for its employees. For example, the Bank officials could refer to the policies in the intranet whenever required, and no need to print the same for reference purposes. This has saved lots of paper printing.
- The Bank has a digital platform for the loan approval process known as a Loan Management System (LMS), an Electronic Document Management System (eDMS) for the digital processing of internal memorandum, Customer Relationship Management (CRM) for digitally managing the relationship with the customer, ENADOC for digital record keeping, Business Process Management (BPM) for digitization of operational procedure and various other digital mediums. All these digital mediums help in achieving environmental sustainability.
- 173 out of 196 branches of the Bank have been operating on solar power / hybrid power as an alternative source of energy for a way forward. This has helped in reducing the use of generators using fossil fuels and thus helping reduction of GHG emissions.
- The Bank is financing Electric Vehicles (EVs) and is planning to increase its financing for Sustainable Electric Transport across Nepal. EVs produce little or no tailpipe emissions and reduce dependence on petroleum, greenhouse gas emissions, and health effects from air pollution.
- To combat Climate Change and achieve Net Zero emissions by 2050, renewable energy plays a vital role. Therefore, the Bank has been financing renewable energy, which is an important portion of green financing. One of the renewable sources, hydropower projects comprises approximately 6.80% of the total loan exposure of the Bank as of FY 2022-23.
- The Bank also contributes financial support for tree plantation under its CSR activities by collaborating with different institutions and government bodies and provides financial support for safeguarding trees in city areas, and heritage sites through multiple institutions.
- The Bank is committed to investing more in the form of green financing, climate change, and digitization to minimize the carbon footprint of the Bank’s operations.
Environmental and
Social Risk Management
(ESRM) Policy
The Bank’s commitment to preserving the environment and being socially inclusive is reflected through our responsible lending protocols, which include a mandatory environmental and social screening process. The Bank formulated the ESRM Policy in June 2019. The Bank has made it mandatory to implement the ESRM policy in every business unit proposal.
The Bank has formalized screening of risks associated with environmental and social issues while extending credit facilities to business units across the country. Every business unit needs to conduct an “Exclusion List” check in the policy and businesses falling under this list is rejected upfront. The Bank has a practice of conducting Environment & Social Risk Due Diligence (ESDD) of business units for credit facilities starting from NPR 10 million and falling under any of the following categories: Small Loan falling under critical sectors, Term Finance, or Project Finance. The ratings received by credit clients play an essential role in the Bank’s risk assessment of the business. Sustainability is a major parameter the Bank looks for in terms of lending to its customers.
The Bank has been proactively working to integrate its ESMS into the organizational culture. The Bank is committed to:
- Recognize Environmental & Social responsibility as one of the key components of the Bank’s business strategies;
- Train and develop respective employees to be ESRM compliant on each business loan file with clearly defined E & S roles and responsibilities
- Comply with NRB’s ESRM guidelines adhering to all relevant national legislation and regulations related to Environmental and Social Sustainability
- Maintain an up-to-date E&S Exclusion List and ensure the Bank does not finance or limit our exposure to the extent allowed in any project/activity as per the Exclusion List
- Integrate ESRM in the Loan Management System for digital capturing of information for strong MIS and decision-making proces
- Obtain Corrective Action Plans for timely addressing of ESRM issues and keeping special ESRM compliance covenants upfront in Credit Acceptance Documents by the clients.
- Review clients E&S performance and managing gaps & non-compliance through effective monitoring
- Disclose and report required information as per the regulatory requirement to ensure public accountability at the same time ensure confidentiality of customers’ information
- Uphold the highest standards of business integrity and good corporate governance
- Upgrade and enhance the Bank’s ESMS in line with new developments in the E&S environment locally and internationally best practices.
- Grievance Handling Unit at the Central level and branch office for addressing customer feedback, complaints, and fraud cases.
- Implementation of Whistle Blower platform for managing internal staff workplace safety, complaints maintaining privacy.
CORPORATE SOCIAL RESPONSIBILITY
The Bank believes in contributing back to the society in which it operates. From the initial days itself the Bank has been contributing in the areas of CSR for the development of different sectors. To further streamline the CSR initiatives, the Bank has established its CSR Guideline which is aligned with the directives issued by the regulatory bodies. The Bank’s CSR initiatives are directed by its revised Social Responsibility Guideline 2021. The guidelines emphasize focusing on CSR projects that have a significant impact on society and offer measurable and sustainable benefits.
Practices relating to Social Responsibility
Being a responsible corporate citizen, to improve society has been at the very front of what we do. Siddhartha Bank places a high priority on social values that will benefit the people of the nation. Continuously, the Bank strive to assist marginalized segments of society through initiatives supporting healthcare, education, women’s empowerment, art, culture, and regular financial literacy programs.
Moreover, the Bank’s focus aligns with various Sustainable Development Goals (SDGs) 2016-2030. Out of 17 Sustainable Development Goals (SDG), the Bank was able to address several during the fiscal year 2022-23 as outlined below:
Financial Literacy
The Bank implemented a series of financial literacy programs across multiple provinces within the country. This initiative was specifically designed to offer comprehensive and accessible financial education to individuals from diverse backgrounds and regions. The primary objective of these programs was to bring improvement in knowledge, attitude, skill and behavior of the audiences. Additionally these programs aimed to empower people with the knowledge and skills needed to make informed financial decisions, manage their finances effectively, and improve their overall financial well-being. Out of total fund utilized, 12.65% i.e. NPR 2.68 million was utilized for financial literacy programs in the FY 2022-23.
Education, Cultural Heritage, and Others
The Bank offered financial support for education & training for education of children’s of deceased or disabled mountaineers, installation of water filters in schools, distribution of printers and other education materials. The Bank also provided financial support for construction of cycle stand in Durga laxmi Multiple Campus.
Health
Siddhartha Bank has also been contributing towards the health and wellness of the society. The Bank provided financial support for conducting health camps, provided financial support for installation of Hemodialysis Machine at Koshi Hospital and also provided financial support for the establishment of a dialysis building at Narayani Hospital. The Bank also provided financial support for installation of sanitary pad vending machine in Makawanpur Multiple Campus and Nepal Army. Similarly the Bank provided financial support for installation of water filter to Fateh Bal Eye Hospital, Bheri Hospital and Nepalgunj Sub-Metropolitan city office and also conducted blood donation program in its various branches.
Sustainability
Sustainable Finance
Portfolio of Siddhartha Bank
The Bank takes into consideration the sustainability aspects of its lending activities. Further, it ensures that part of the portfolio is also directed towards sustainable financing.
The current portfolio under sustainable financing of the Bank includes hydro-power projects, renewable energy vendor financing, rooftop solar, electric vehicles, agriculture, production-based MSMEs, etc. A significant portion of the Bank’s lending comprises renewable energy sectors including Hydropower and Solar Energy.
Furthermore, the Bank has been financing towards Directed Sector as instructed by the central bank, i.e. MSMEs, Agriculture, Energy, and Deprived Sector
Directed sector-wise lending as a percentage of the Bank’s total loans as of FY 2022-23 end calculated as per NRB requirement is as below:
The Bank promotes women’s empowerment and has a wide array of deposit and loan products to serve women. It provides women entrepreneurship loans for entrepreneurship development and employment creation. The Bank provided micro-loans equivalent to NPR. 2.05 Billion to more than 2371 women-led entrepreneurship businesses till FY 2022-23.
Sustainable Partnership & Collaborations (SDG-17)
The Bank has forged partnerships and collaborations with institutions involved in the sector of Sustainable Banking and enhancing access to finance. A few collaborations and programs are:
- Collaboration with the United Nations Capital Development Fund (UNCDF) to fund for providing Access to Finance for Agricultural Development and to extend Branchless Banking for Projects (Unnati).
- Partnership with the UKAID Sakchhyam to increase the core competency of the Bank in SME lending.
- Partnership with the KFW Development Bank, Germany’s Financial Project in Nepal called Sustainable Economic Development in Rural and Semi-Urban Areas – MSME Finance Phase II (SEDRA II) to improve access to loan financing for Micro, Small and Medium-sized Enterprises (MSMEs) in rural and semi-urban areas with financing needs in the ‘Missing Middle’ segment.
- Partnership with Heifer International Nepal to enhance financial access to women entrepreneurs and small farmers and provide easy loans
Bank’s contribution to its responsibilities
towards the staff and the National Economy
Healthy and Safe Working Environment (SDG 3)
Health, safety, the environment and loss control in the workplace are everyone’s responsibility. Human Capital is the back bone of the Siddhartha Bank and we are committed to provide Safe, Healthy and comfortable work environment to our human capital for enriching their productivity. Health and safety at workplace is not just limited to provision of a medical cover and facilities for medical treatment but it also covers the safety and security at the work place. The health security policy of the Siddhartha Bank ensures proper cleanliness, adequate lighting, ventilation at workspace, risk assessment exercise, creation of safety plan, safety training, fire safety drills, arrangement of First Aid Box, and earthquake evacuation drills.
Encouraging work-life balance (SDG 8)
Siddhartha Bank encourages work-life balance and provides various facilities to help employees manage their work and personal responsibilities. The following are initiatives adopted by the Bank to encourage work-life balance:
- The Bank provides all employees with 30 days of Annual Leave, 12 days of Sick Leaves and 9 days of Casual leave.
- Bank employees are encouraged to utilize at least 10 days from their Annual Leaves and avail the LFA facility extended by the bank to rejuvenate every year.
- In order to ensure that employees enjoy a healthy balance between work and rejuvenation while promoting health, the bank shall organize various sporting activities including but not limited to football, cricket, table tennis etc.
- Arrangement of working in shifts to manage the workload and provide better work-life balance to employees.
- Various Loan facilities (Home loan, vehicle loan, personal loan) to staff to meet the personal requirement.
- Medical and accidental insurance coverage for all the staff working at the Bank to meet the medical expenses of staff and family members.
Providing opportunities for professional development
Siddhartha Bank provides opportunities for its employees to learn and develop new skills. Siddhartha Bank believes that any amount spent on the training and development of the employee is not an expense but an investment. The Bank has been continuously investing in its employee to enrich their capabilities through national and international training, on-the-job training, in-house training, job orientation, refresher programs as well as a range of other learning and development activities.
Competitive compensation and benefits
Siddhartha Bank provides competitive compensation and benefits for various duties and responsibilities that employees are required to undertake. Compensation and benefits are essential human psychological aspects that encourages employees to take the assigned responsibilities according to the best of their abilities and create the willingness among employee to complete the assigned work in a best possible way. We understand the need, motives and desires of every employee and develop new techniques, systems and methods to fulfil the changing needs of employees.
Career Management/Succession Planning
The succession philosophy at Siddhartha Bank is based on its core cultural elements of Sustained Growth, Transparency, Innovation, Integrity and Customer Centricity. We ensure that each phase of the employee life cycle is governed by a set a clear and transparent processes which can help employees fulfill their professional growth and create a culture of performance at Siddhartha Bank.
With these initiatives Siddhartha Bank has been promoting employee well-being, development, and engagement. Our contribution to the responsibilities towards employee has helped us to create a workplace that is supportive, engaging, and motivating for its employees. This, in turn, leads to increase in productivity, job satisfaction, and employee retention.
Employee engagement program:
Employee engagement is crucial for inspiring quality work, commitment, and value in the employees. The Bank makes effort to organize various programs each fiscal year. Some of the staff engagement programs conducted by the Bank in FY 2022-23 are as follows:
Customers
Customers of Siddhartha Bank include retail, MSME, mid corporates and large corporates, backward and marginalized groups, farmers, traders, wholesalers etc. For continuous and quality service, Siddhartha Bank operates 196 branches, 225 ATM, 123 Branchless Banking Unit, NPR 190.87 billion in advances, NPR 228.57 billion in deposit and 1.58 million plus customer till fiscal year 2022-23
Job creation
The Bank as of the end of FY 2022-23 directly employs 1,970 people. 247 permanent staff are recruited in FY 2022-23. The Bank's branches and businesses are expected to increase in coming years leading to fresh recruitment of human resources. Further, the Bank is indirectly creating job opportunities with easy financing to deprived sector, small and medium enterprises, corporate financing, and project financing.
Investor
The Bank is committed to create sustainable impact for today and for generation to come with transparent and timely disclosures to enable informed decision-making. The Bank earned NPR 3.17 billion as net profit, return on equity 13.50%, Earning per share stands NPR 22.48 and dividend distributed 4.21% for fiscal year 2022-23
Contribution in the form of taxes
Being a responsible corporate citizen, the Bank has ensured its noteworthy contribution in national goals like raising the living standard of the deprived sector, supporting employment creation, increasing tax/revenue collection, enhancing access to Banking, etc. The Bank has been pivotal in the Government’s objective of ensuring every citizen has a Bank account.
The Bank has contributed to the government exchequer of NPR 2.99 billion during the review year. The table below shows the Bank’s contribution during the past six fiscal years:
BUSINESS ETHICS AND
ANTI-CORRUPTION MEASURES
As an organization committed to the prevention of Bribery and Corrupt-Practices, the Bank:
- Prohibits officials engage in any type of bribery and corrupt practice.
- Prohibits employees to offer, promise, accept, influence any type of gifts or facilities or things or services or acts as described by this Policy to or from third parties or customers or any other person for impartment of their duties. Provided, there is no restriction in acceptance of festival gifts offered in a normal manner.
- Prohibits officials to offer, promise or provide anything as restricted by this Policy to any public official or third parties or customer to influence them or obtain business or personal benefits.
- Prohibits third parties and customers to offer anything as restricted by this policy to officials of the Bank to impress or influence to get any banking or other services from the Bank. nProhibits officials from carrying any kind of unethical or unfair practice or favoring or manipulation in the process of recruitment, promotion or professional development of employees and must assure competency-based human resources procedures and processes for recruitment, promotion and professional development.
- Apply fair process in the selection and appointment of suppliers/vendors/business partners/contractors or any other persons for the services of the Bank abiding by due process set out by prevalent laws, regulatory directives and internal rules as applicable.
Annual Statement on Environmental and Social Risk Management
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