CSR of PSUs may be funded by 2-5% of net profit

Corporate social responsibility for a state-owned firm may no more be a "photo opportunity" for its chairman but would involve people-centric projects to be funded by 2-5 per cent of the company's net profits.

The Department of Public Enterprises (DPE) is in the final stage of preparing guidelines for the central public sector enterprises (CPSEs) to take up important corporate social responsibility (CSR) projects, DPE Secretary Bhaskar Chatterjee told PTI.

The proposal, cleared by the Committee of Secretaries and awaiting approval by Heavy Industries and Public Enterprises Minister Vilasrao Deshmukh, involves contribution of 3-5 per cent of net profits of up to Rs 100 crore.

Those earning net profit of more than Rs 100 crore may be asked to contribute up to two per cent of the amount, he said.

The CSR would no more be confined to organising blood donation camps or some charity event. The CPSEs would be obliged to take up specific projects to help people affected directly or indirectly by their businesses.

"The government has taken a very firm step. There is no escaping from CSR, which will no longer be a photo opportunity for the chairman," Chatterjee said.

This would be their primary obligation, out of the profits that they make. "You (CPSE) must recycle it to help the society," Chatterjee said.

He said the CSR norms would be finalised within a month. "I would put a timeline of two to three weeks".

While several CPSEs provide funds for CSR projects, it is not obligatory in nature.

Chatterjee said the guidelines would provide for measurement of the CSR. "This is happening not just in India but across the world," he said.

These obligations would be set in the Memorandum of Understanding, which sets targets for an individual CPSE.

The performance evaluation would also have CSR as one of the parameters.