Govt to rate NGOs to help cos discharge CSR effectively: Report

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 Companies have to spend 2% of their average profit of last three years on poverty eradication, education & women empowerment

Picture: www.thehumanfactor.i

NEW DELHI: The government will rate non-profit organizations according to their past performances so that it helps companies effectively discharge their corporate social responsibility under the new Companies Act 2013.

As per the Act, the companies have to spend 2% of their average profit of last three years on activities such as eradication of poverty, education, contribution to prime minister relief fund and women empowerment.

“The companies can’t do this directly. They will have to depend on NGOs, trusts and civil societies. To help them identify right agency, we will give accreditation to NGOs based on their performances of last three years,” said Bhaskar Chatterjee, director general and chief executive officer of Indian Institute of Corporate Affairs (IICA), a body under Ministry of Corporate Affairs.

“For this we are partnering with Tata Institute of Social Sciences (TISS),” added Chatterjee. He is said to be the brains behind drafting the draft CSR rules, for which public comments have been invited till 8 October. He was speaking at a seminar organized by the non- profit organisation Centre for Ethical Life and Leadership.

The government estimate suggests, around 8,000 companies would contribute Rs 12,000-15,000 crore for CSR activities under the Companies Act.

On Monday, the Bombay Stock Exchange and the IICA signed a memorandum to develop a corporate social responsibility index. The index will assess the impact and performance of companies listed at BSE in CSR activities. The index would also look at the performance of companies in their mandatory CSR spend as per the new Act.

Chatterjee said the Act provisions jail term and fine for directors and independent director for failing to implement mandatory CSR spend. For instance, under the draft rule, the government has proposed a minimum fine of Rs 50,000 rupees on companies and depending upon the situation it can go up to Rs 25 lakh. Officers defaulting may face a punishment of three year jail term and a fine of Rs. 5 lakh.

S Y Quraishi, former election commissioner of India, said list of eligible activities under the rules was restrictive rather than enabling. “It is imperative to address these issues if the desired impact is to be achieved.”

(Business Standard)

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