Nepal Rastra Bank (NRB) has introduced new guidelines to manage how banks and financial institutions spend their Corporate Social Responsibility (CSR) funds. According to the updated rules, banks must set aside at least 1% of their net profit for CSR, with the focus on helping poor, marginalized, and disadvantaged communities.
The guidelines aim to make CSR spending more transparent and impactful, banning its use for personal or business promotion. The rules took effect on 13 Bhadra 2082.
Where banks can spend CSR funds
Banks can use CSR money in these areas:
- Education: rebuilding schools damaged by disasters, scholarships for poor or disabled students, providing books, furniture, computers, internet, and basic facilities like toilets and drinking water.
- Health: equipment for government hospitals, free treatment for poor patients, wheelchairs, hearing aids, health camps like cataract surgery.
- Humanitarian aid: relief for disaster victims, support for orphanages, nutrition for children and mothers in poor communities.
- Environment: waste management awareness, eco-friendly infrastructure like solar or biogas, water supply systems.
- Financial literacy: training programs, awareness on digital banking and cashless payments.
- Sustainable development goals: projects supporting UN goals for poverty reduction.
- Other: sports equipment for schools, skill-based training, community infrastructure.
In some cases, banks must coordinate with local governments and spend at least 10% of CSR funds in each province.
Where banks cannot spend CSR funds
CSR money cannot be used for:
- Brand promotion, marketing, sponsorships, political events, or profit-making activities
- Benefits for directors, senior officials, or affiliated organizations
- Business expansion projects with conditions
- Large development projects not counted as CSR by NRB
- Private or staff-related expenses
Any misuse will lead to action under the Banking and Financial Institution Act, 2073.
Impact of the new rules
NRB expects this move to shift CSR from “show-off” activities to genuine social development. Banks must report CSR spending every year to NRB and publish it on their websites. While experts welcome the change, some banks see it as an added burden.
The rules are effective immediately, and banks failing to comply will face regulatory action.
