Govt mulls proposal to mandate CSR spending by LLPs, PSBs: Report

Four out of 12 PSBs have an average profit of Rs 15,732 crore, according to a calculation cited by Mint.

The government is planning to make it compulsory for limited liability partnership (LLP) firms and state-run banks to spend 2 percent of their net profit in corporate social responsibility (CSR) activities, Mint has reported.

LLPs and public sector banks (PSBs) come under the LLP Act, 2008, and the Banking Regulation Act, 1949, which do not mandate compulsory CSR spending.

"The existing provisions anyway exempt small firms from the mandatory CSR, hence small LLPs should not worry. Formalisation of CSR laws for LLPs and PSBs on a par with other companies is desirable to create a level playing field and plug any loophole that would push many profitable firms to take the LLP route," a source told the publication.

Moneycontrol could not independently verify the story.

The corporate affairs ministry, the Department of Financial Services (DFS) and State Bank of India (SBI) had not responded when contacted by Mint.

Entities that are incorporated under the Companies Act, 2013, with a net worth of at least Rs 500 crore or revenue of Rs 1,000 crore or net profit of Rs 5 crore should spend at least 2 percent of their average net profit made during the three preceding financial years on CSR.

Four out of 12 PSBs have an average profit of Rs 15,732 crore, according to a calculation cited by Mint. This means CSR spending of 2 percent would be at least Rs 300 crore, the report said.