Union Minister of State for Finance and Corporate Affairs Anurag Thakur on March 22 clarified the government does not use the Corporate Social Responsibility (CSR) funds to run its schemes.
During the Question Hour in Lok Sabha, Thakur said so far Maharashtra (Rs 12700 crore) has received maximum CSR funds, followed by Gujarat (Rs 3926 crore) and Andhra Pradesh(Rs. 3542 crore).
“We don’t use CSR funds to run the Centre’s schemes,” he said.
The minister alsoasserted that the government does not interfere with regard to allocation of CSR funds by firms.
Under the Companies Act, certain class of profitable entities are required to shell out at least 2 per cent of their three-year annual average net profit towards CSR activities.
In case of not spending the requisite amount, the firms concerned have to provide reasons for the same.
Replying to a query on the RBI’s internal working group (IWG) report which had recommended that large corporate or industrial houses may be allowed as promoters of banks, he said the central bank has not taken any decision on the issue.
“The RBI will take a final decision keeping in mind interest of consumers of banks” Thakur said, adding even today private sector majority stake is in banks like ICICI and HDFC.
Last year, an internal working group set up by the RBI has proposed to raise the cap on promoters’ stake in private banks from the current 15 per cent to 26 per cent in 15 years.
The group has also recommended that large corporate or industrial houses may be allowed as promoters of banks only after amendments to the Banking Regulation Act and strengthening of the supervisory mechanism for conglomerates, including consolidated supervision.
The Reserve Bank of India had constituted the internal working group (IWG) on June 12, 2020, to review extant ownership guidelines and corporate structure for Indian private sector banks.
CSR in India
The amount under Corporate Social Responsibility (CSR) is allocated and utilised by various Companies in accordance with the broad framework provided by the Government under section 135 of the Companies Act, 2013 (‘Act’) and Companies (CSR Policy) Rules, 2014, as amended from time to time. The Act, inter-alia, stipulates that companies exceeding the threshold limits, as specified in the Companies Act, 2013, have to allocate at least 2% of their average net profits of the company made during the three immediately preceding financial years for CSR activities.
The Board of a company is empowered to plan, decide, execute and monitor CSR activities of the company. Schedule VII of the Companies Act indicates the activities that can be undertaken by the companies, which, inter-alia, include Health care, Education and Rural Development Projects, etc. Further, the first proviso to section 135 (5) of the Act provides that the company shall give preference to local areas and the areas around it where it operates.
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