Q1: What is Corporate Social Responsibility (CSR)?
A1: Corporate Social Responsibility (CSR) refers to initiatives and practices undertaken by corporations to contribute positively to society. This includes a range of activities, from donating money to nonprofits to implementing environmentally-friendly policies in the workplace.
Q2: When was the CSR regime introduced in India?
A2: The CSR regime was introduced in India in 2013 as part of the Companies Act.
Q3: Why was there a need for CSR regulations?
A3: The need for CSR regulations arose to ensure that companies play a part in addressing various societal challenges, thereby promoting sustainable and inclusive growth.
Q4: How has the CSR regime evolved since 2013?
A4: Since its introduction in 2013, the CSR regime has undergone several amendments. It has become more prescriptive, moving away from its original intent of nudging corporates towards CSR initiatives.
Q5: What significant changes were introduced in 2021?
A5: In 2021, the Ministry of Corporate Affairs (MCA) introduced the Companies (Corporate Social Responsibility Policy) Amendment Rules. These rules mandated the board of directors of a company to ensure that the funds allocated for CSR activities were used for the intended purpose.
Q6: What clarification did the MCA provide regarding CSR fund utilization?
A6: The MCA clarified that simply disbursing funds for a CSR project doesn't qualify as spending unless the entire amount is utilized within the financial year.
Q7: How do these clarifications impact the development sector and NGOs?
A7: The clarifications might push companies towards a back-ended payment plan for CSR projects, affecting NGOs that might not have the resources to initiate projects without upfront funding. This could confine CSR project funding and implementation within specific fiscal timelines.
Q9: Do these changes signify overregulation?
A9: Many believe that the prescriptive nature of the recent clarifications indicates an overregulation of the CSR regime, which might not be in the best interests of all involved sectors.
This FAQ provides insights into the CSR regime, its introduction, the need for its establishment, and the recent changes that have raised concerns in the corporate and development sectors.