CSR Fund Utilization Guidelines and Monitoring Mechanisms: The Ministry of Corporate Affairs clarified the framework for Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013. Companies meeting specific financial thresholds must allocate at least 2% of their average net profits from the last three financial years to CSR activities as per their approved CSR Policy. The Companies (CSR Policy) Rules, 2014, and Schedule VII of the Act provide additional standards for CSR spending.
Monitoring and evaluation mechanisms include board-level oversight, where the CSR Committee formulates and recommends an annual action plan detailing fund utilization, monitoring protocols, and impact assessments. The company’s Board must ensure that disbursed funds are used for approved purposes, with certifications provided by the CFO or an equivalent officer.
The Ministry noted that there are no special provisions for training, support, or incentives for companies implementing CSR activities in tribal or backward regions of Jharkhand. Additionally, no specific schemes are in place to direct CSR funds toward local community development in the state.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
RAJYA SABHA
UNSTARRED QUESTION NO. 2444
ANSWERED ON TUESDAY, DECEMBER 17, 2024
GUIDELINES AND STANDARDS FOR COMPANIES USING CSR FUNDS
QUESTION
2444 SHRI DEEPAK PRAKASH:
Will the Minister of Corporate Affairs be pleased to state:
(a) whether there are any guidelines and standards for companies using CSR funds;
(b) the mechanism for monitoring and evaluation of the utilisation of CSR funds;
(c) the training and support, incentives and provisions made for the companies utilising CSR funds in tribal and backward areas of Jharkhand for effective implementation of those programmes; and
(d) whether there is any special scheme to ensure the utilisation of CSR funds for development of local communities in the State, if so, the details thereof?
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): The guidelines and standards for companies using CSR funds provided in the legal framework for Corporate Social Responsibility (CSR under Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Section 135 of the Act mandates every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or net profit of Rs. 5 crore or more during the immediately preceding financial year, to spend at least two per cent of the average net profits of the company made over immediately preceding three financial years towards CSR as per the CSR Policy of the Company.
(b): The Board of the company is required to disclose the CSR Policy implemented by the company in its Board report and the Board of the company has to satisfy itself that the funds so disbursed have been utilised for the purposes and in the manner as approved by it, and the Chief Financial Officer or the person responsible for financial management shall certify to the effect. The CSR Committee shall formulate and recommend to the Board, an annual action plans in pursuance of CSR policy, which includes the modalities of utilization for funds, monitoring and reporting mechanism for the projects or programs and details of need and impact assessment, if any, for the projects undertaken by the company.
(c) & (d): There is no provision for training and support, incentives and provisions made for the companies utilising CSR funds under CSR legal framework and also there is no special scheme to ensure the utilisation of CSR funds for development of local communities in the State.
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