August 4: A study conducted by Nepal Rastra Bank (NRB) on Corporate Social Responsibility (CSR) programmes of banks and financial institutions (BFIs) has shown that the CSR programmes of commercial banks have not been equally divided in various provinces.

According to the study, the commercial banks spend more than two-third of funds for CSR in Bagmati Province. The study has also shown that the commercial banks spent 67.95 percent of CSR fund in Bagmati Province in fiscal year 2076/77.

Since FY 2076/77, commercial banks are required to spend a minimum of 10 percent of the CSR amount in each province. However, the study has shown that commercial banks have not implemented CSR programmes in the prescribed proportion. According to the study, except Bagmati Province, less than 10 percent CSR amount has been spent in other provinces in the fiscal year 2076/77.

Among the seven provinces, the banks have spent the least amount in Karnali Province. Only 3.56 percent of funds allocated for CSR have been spent in Karnali Province.

The study has shown that the share of CSR-related expenditure by banks is increasing. In FY 2075/76, commercial banks in Bagmati Province had spent about 75 percent of the CSR fund.

In the same year, 1.13 percent CSR fund was spent in Karnali Province.

Executive director of NRB Prakash Kumar Shrestha said that the CSR programme of commercial banks is not balanced in every province. He is of the view that this may have been due to high demand in Bagmati due to various reasons. However, the CSR programme needs to be balanced as per the prescribed proportions. “Now we have brought out the real situation of the CSR programme. The reason behind the unbalanced distribution of CSR programmes needs to be further studied,” he said.

He also said that the ratio of spending to CSR has not been implemented. “The central bank has directed commercial banks to spend a minimum of 10 percent of fund allocated for CSR in a province. However, it has not been implemented yet,” he said, “But there has been improvement.”

Although the CSR programme of commercial banks is not balanced in all provinces, the overall banks and financial institutions have spent more than the stipulated amount on CSR.

BFIs are required to spend at least one percent of their net profit on CSR. However, the study has shown that they spent 1.58 percent of their profit. They have spent Rs 1.28 billion on CSR.

According to the study, A-class commercial banks have been allocating 1.54 percent of the profit for CSR on average. Similarly, Class B banks have been allocating 1.55 per cent, Class C finance companies 1.66 per cent and Class D microfinance institutions 2.1 per cent for CSR.

Many banks and financial institutions participating in the survey have been conducting CSR programmes for the purpose of building their reputation. Similarly, the study has shown that such programmes are also done for business growth and customer satisfaction.

Likewise, 85 percent of banks and financial institutions have their own corporate social responsibility policy. Moreover, the study has shown that 51 percent banks and financial institutions make annual plans in this regard.

In FY 2075/76, 35 percent of the commercial banks disclosed sectoral expenditure from the CSR Fund in their annual report, which increased to 38 percent in FY 2076/77.

Furthermore, in FY 2075/76, 12 percent of the commercial banks disclosed the provincial expenditure from the CSR Fund in the annual report, which increased to 30.8 percent in FY 2076/77. However, according to the study, the expenditure details of the CSR fund have not been disclosed in the annual report as instructed.

NRB had conducted a survey in this regard through virtual medium from November 5 to December 11. This is also the first survey on CSR. Most of the commercial banks had participated in the survey. Besides, Shrestha said that development banks, finance companies and microfinance financial institutions were also brought under the scope of the survey.

“We conducted a survey in this regard by bringing limited information in a limited time. Therefore, it is not complete in itself,” he said, “Nevertheless, it shows the real state of the CSR programme. As a result, this survey will help us make additional policy arrangements in this regard.”

The study has shown that the CSR programme needs to have a balance in terms of geographyl and region. In addition, Shrestha said that there is a need for clear guidance and direction to make CSR-related expenditure transparent.

The study also explores various aspects of CSR in the Nepal’s banking sector. According to the study, the size of the CSR fund is increasing and its proper use can have social benefits to the economy.