Banks now required to spend 5 percent of total CSR fund on financial literacy

Published On: September 11, 2020 07:47 PM NPT By: Republica | @RepublicaNepal

Republica Files

BFIs are now also allowed tapping into CSR fund for the treatment of employees infected with COVID-19

KATHMANDU, Sept 11: Bank and financial institutions (BFIs) will now be required to spend five percent of their total fund for the corporate social responsibility on financial literacy.

Making amendment on the Unified Directives 2076, Nepal Rastra Bank (NRB) has made it mandatory for BFIs to spend 5 percent of their CSR fund on financial literacy related programs.

“Bank and financial institutions (BFIs) will have to spend 5 percent of their total CSR fund on various programs and targeted training programs related to financial literacy to make women and socially backward groups financially literate and increase their access to finance,” read the amendment made to the Unified Directives.

With the provision in place, there should be 5 percent of spending out of the total CSR fund on programs aimed at increasing financial literacy and access to finance for women and backward groups.

BFIs are required to set up a separate CSR fund and allocate 1 percent of their net profit every fiscal year to spend on activities that promote social and environmental changes. There is a separate provision under the central bank’s directive on corporate governance to lay down processes, criteria and sectors to spend such funds.

The new amendment adds financial literacy where the fund will have to be spent.

Likewise, the central bank has now allowed BFIs also to use the CSR fund for the protection, containment and treatment of its employees from the pandemic like COVID-19.

Indirect expenses for social projects on various fields including health, education, disaster risk management, environment protection, direct grants for the most deprived sectors for the spending on education, health and physical infrastructure, expenditure on Sustainable Development Goals (SDGs), grants to orphanage and old age home and Rs 100 deposit that BFIs make as part of ‘Let’s Open Bank Account’ campaign, are among the activities that BFIs are allowed to spend the CSR fund.