Procedure for Allocation of Funds Under CSR

The Lok Sabha addressed queries about the Corporate Social Responsibility (CSR) fund allocation process and expenditures. CSR activities are governed by Section 135 of the Companies Act, 2013, and Companies (CSR Policy) Rules, 2014, requiring companies to form CSR Committees to recommend and oversee CSR policies. The decision-making and fund allocation processes are managed by the company’s Board of Directors, and there are no specific provisions for incorporating suggestions from local MPs. In the financial year 2022-2023, Uttar Pradesh saw a total CSR expenditure of ₹1,152.57 crore. Major allocations were made in Gautam Buddha Nagar (₹226.40 crore), Mathura (₹118.21 crore), and Varanasi (₹100.23 crore). Other districts, including Hardoi, Lucknow, and Ghaziabad, also received significant funding. The expenditure data highlights the broad scope of CSR investments across various districts in Uttar Pradesh, emphasizing the government’s regulatory framework and oversight in managing these funds.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS

LOK SABHA
UNSTARRED QUESTION NO. 30
ANSWERED ON MONDAY, JULY 22, 2024/ 31 ASHADHA, 1946 (SAKA)

PROCEDURE FOR ALLOCATION OF FUNDS UNDER CSR

QUESTION

30. MS IQRA CHOUDHARY:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

(a) the process of identification/execution of work, allocation of funds, approval of works to be undertaken under the Corporate Social Responsibility (CSR) head and the entire process and rule of procedure for receiving funds from the corporates and upto the execution of the work along with the details thereof;

(b) the stage at which the proposals/suggestions of local MPs are received in the said process; and

(c) the district-wise total amount of funds spent under the above head during the last financial year in the State of Uttar Pradesh?

ANSWER

MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

[SHRI HARSH MALHOTRA]

(a) CSR is regulated by provisions of section 135 of the Companies Act, 2013 (‘Act’), read with Schedule VII of the Act and Companies (CSR Policy) Rules, 2014 which provide broad framework within which the eligible companies are required to formulate their CSR policies including activities to be undertaken and implementation of the same. Every eligible company has to constitute a CSR Committee comprising three or more directors. The Committee formulates and recommends the CSR policy which indicates the activities to be undertaken by the company in area or subject specified in Schedule VII. The Board is empowered to plan, decide, execute and monitor the CSR activities of the company based on the recommendation of its CSR Committee. There is no provision for allocation of CSR funds under CSR framework. Section 135 (3) & (4) of the Companies Act, 2013, empowers the Board of the company to take decisions regarding allocation of their Corporate Social Responsibility (CSR) funds for items listed in Schedule VII of the Act.

(b) There is no expressed provision in CSR legal framework for taking proposal/ suggestion of local MPSs. CSR is a board-driven process and the Government does not issue any specific direction to the companies to spend in any particular activity or geographical area.

(c) The district-wise total amount of funds spent under the CSR head during the last financial year i.e. 2022-23 in the State of Uttar Pradesh is given at Annexure.

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ANNEXURE

ANNEXURE REFERRED TO IN REPLY TO LOK SABHA UNSTARRED QUESTION NO. 30 FOR 22.07.2024

Data upto 31.03.2024) [Source: Corporate Data Management Cell]

*Companies either did not specify the names of District or indicated more than one District where projects were undertaken.

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