CB BureauThe finance ministry’s proposal to exempt banks from mandatory corporate social responsibility (CSR) has been rejected by the corporate affairs ministry.
Interestingly, both the ministries are headed by Arun Jaitley, who also heads defence ministry. An update published byThe Economic Times claims that asenior official in the ministry of corporate affairs has confirmed that there is no case for any such exemption.The newspaper carries this statement from an official who did not wish to be identified: ‘The Companies Act, 2013, has to be followed in letter and spirit. We have to go by the existing legal framework.’
In May this year, banks and non-banking finance companies (NBFCs) had approachedthe finance ministry seeking temporary relief from mandatory CSR law. The banks and NBFCs had cited poor economic growth and increasing capital requirements as the reason for requesting exemption.
It is to be noted that private sector banks and foreign bank branches are incorporated under the Companies Act and therefore they have to follow CSR norms under Section 135 of the Act. The ministry has not made any comment on its position on state-run banks as they are incorporated under theNationalised Bank Actand the norms in the Companies Act may not apply to them.