Lok Sabha Question No. 365 (STARRED), answered on 2021-03-22
Subject: Checks on CSR Spendings
Ministry: CORPORATE AFFAIRS
Asked by: Rahul Ramesh Shewale, Hemant Patil

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA STARRED QUESTION NO. 365 ANSWERED ON MONDAY, MARCH 22, 2021/ CHAITRA 1, 1943 (SAKA)

## CHECKS ON CSR SPENDINGS QUESTION

*365.  SHRI RAHUL RAMESH SHEWALE: SHRI HEMANT SRIRAM PATIL:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) whether the Government keeps a check on spending of requisite profits under Corporate  Social  Responsibility  (CSR)  by  the  Public  and  Private  Sector companies in the country;
- (b) if so, the details thereof and if not, the reasons therefor;
- (c) the number of companies against which the Government has taken penal action for non-compliance of the provisions of the Companies Act, 2013 pertaining to CSR during each of the last three years and the current year, company-wise;
- (d) the manner in which the Government unearthed clandestine activities adopted by the said companies to get rid of their requisite spendings  under CSR; and
- (e) the other steps taken by the Government to ensure the requisite spending of profits under their CSR by the said companies?

## ANSWER

THE MINISTER OF FINANCE AND CORPORATE AFFAIRS                             (SHRIMATI NIRMALA SITHARAMAN) वित्त एिं कारपोरेट कार्य मंत्री ( श्रीमती विमयला सीतारमण )

(a) to (e):  A Statement is laid on the Table of the House.

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STATEMENT REFERRED TO IN ANSWER TO PART (a) TO (e) OF LOK SABHA STARRED QUESTION NO. 365* (5 TH  POSITION) FOR 22 ND  MARCH, 2021 REGARDING CHECKS ON CSR SPENDING.

(a)  to  (e):    The  Government  provides  the  broad  framework  for  Corporate  Social Responsibility  (CSR)  through  Section  135  of  the  Companies  Act,  2013  ('Act'), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. CSR is a Board driven process and the Board of the company is empowered to plan, decide, execute and monitor CSR activities of the company based on the recommendation of its CSR Committee.  The CSR architecture is disclosure based and CSR mandated companies are required to file details of CSR activities annually in the MCA21 registry.  The existing legal provisions such as mandatory disclosures, accountability of the CSR Committee and the Board, provisions for statutory audit of accounts of the company etc.  provide  sufficient  safeguards.  Whenever  any  violation  of  CSR  provisions  is reported,  action  against  such  non-compliant  Companies  are  initiated  as  per provisions of the Act after due examination of records and following due process of law. All CSR related defaults are compoundable. So far, sanction for prosecution has been accorded in 366 cases. Of these, 148 applications for compounding have been made  and  75  cases  have  been  compounded.    Further,  through  Companies amendment  Act,  2019,  the  non-compliance  of  CSR  has  been  a  civil  wrong  from financial year 2020-21 onwards.

As  per  filings  made  by  the  Companies  in  the  MCA21  registry,  the  CSR  spent  by various public and private sector companies during last three financial years 201718, 2018-19 and 2019-20 respectively are given below:

|                                   | FY 2017-18        | FY 2017-18                  | FY 2018-19        | FY 2018-19                  | FY 2019-20        | FY 2019-20                  |
|-----------------------------------|-------------------|-----------------------------|-------------------|-----------------------------|-------------------|-----------------------------|
| Nature of Company                 | No. of Compan ies | Total Amount Spent (in Cr.) | No. of Compan ies | Total Amount Spent (in Cr.) | No. of Compan ies | Total Amount Spent (in Cr.) |
| Public Sector Undertakings (PSUs) | 535               | 2,704.32                    | 609               | 3,835.50                    | 14                | 438.29                      |
| Non-PSUs                          | 20,915            | 11,185.53                   | 24,323            | 14,819.32                   | 1,061             | 7,384.21                    |
| Grand Total                       | 21,450            | 13,889.85                   | 24,932            | 18,654.82                   | 1,075             | 7,822.50                    |

(Data upto 30.09.2020) [Source: National CSR Data Portal]

Contd…2/-

The Companies (Amendment) Act, 2019 and 2020 have made requisite amendments to  Section  135  of  the  Act  and  provided  for  treatment  of  unspent  CSR  fund  by companies. In case a company has any ongoing project, the company shall open a special  account in any scheduled bank in order to discharge its CSR obligation . Further,  the  amendments  in  the  Companies  (CSR  Policy)  Rules,  2014  have  been notified on 22 nd  January 2021. These amendments aim at strengthening the CSR ecosystem by enhancing the disclosures, simplifying the compliances, bringing in more objectivity, transparency and entrusting more responsibility on the Board of the company.

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