IndiaCSR News Network
MUMBAI: State Bank of India (SBI) is planning launch SBI Foundation, a company that will undertake activities pertaining to corporate social responsibility (CSR) on behalf of the group.
The bank has received approval from the Reserve Bank of India for setting up the company, which is likely to be launched on July 1, the foundation day of the bank.
Confirming the move, SBI chairman Arundhati Bhattacharya told, “CSR activity is a very important activity for us. To give it a sharper focus, we have decided to float a separate entity.”
As per the revised Companies Act, corporates have to mandatorily set aside 2 per cent of their net profit of the previous year for CSR activity. The rule, however, is not applicable to commercial banks as they are governed by the Banking Regulation Act, which does not mandate this.
For several decades, SBI has been setting aside 1 per cent of its net profit for activities related to CSR.SBI Foundation will be formed under Section 8 of Companies Act that applies to not-for-profit companies. “Now, we plan to hire professionals for the company” she said. In the last fiscal year, the bank had spent nearly ` . 115 crore on activities related to CSR.
The five associate banks of SBI and several of its subsidiaries are also likely to undertake CSR activ ity through the SBI Foundation.Some of SBI’s big subsidiaries -SBI Capital Market, SBI Life, SBI General and SBI Mutual Fund and SBI Gilts -will have to set aside 2 per cent of net profit for CSR as they are governed by the Companies Act. Resources of all associate banks and subsidiaries could . 200-250 crore for be ` this fiscal year.
Officials from the bank said that if this activity is undertaken under a single entity it will reduce the administrative cost and also allow for transparent functioning since it would be a regulated entity.
“The SBI Foundation will essentially focus on skill development, women’s empowerment, sanitation and education” said Vinod Pande, chief general manager at SBI in charge of CSR.
At Gyan Sangam, a two-day workshop earlier this year, Prime Minister Narendra Modi had proposed to the chiefs of public sector banks that they collectively undertake a single project under its CSR initiative instead of each bank supporting different projects across the country.
The SBI initiative is likely to be a move in that direction, since it will include associate banks and subsidiaries.
Meanwhile, the ministry of corporate affairs has rejected a proposal by companies to classify donations given to quake-hit Nepal as part of their CSR activity. The ministry of corporate affairs rejected the proposal on the grounds that the contribution has to be within the country.
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