"BFIs must spend at least 10 percent of CSR funds in each province"

 

KATHMANDU, MARCH 18 : Banks and financial institutions (BFIs)  must now onwards distribute their Corporate Social Responsibility (CSR) funds across all seven provinces of the country. Nepal Rastra Bank (NRB) yesterday introduced the Guidelines on Corporate Social Responsibility of Banks and Financial Institutions, 2025, requiring at least 10 percent of such funds to be spent in every province.

The guidelines emphasize that CSR spending should not be concentrated in a single geographic area or subject. Instead, the priority must be given to life-saving initiatives, public welfare, and philanthropic activities within the institution’s operational regions, ensuring fair and equitable distribution. In line with this, the BFIs must allot a minimum of 10 percent of their total CSR budget to each province.

Restrictions on CSR Expenditure

The guidelines impose a five percent cap on CSR spending for any single activity. No more than five percent of the total eligible CSR budget for a given fiscal year may be spent on a single program. However, if BFIs wish to undertake projects of special public significance in collaboration, they may do so with prior approval from the central bank

The CSR funds cannot be used for brand promotion and marketing campaigns, sponsorship of various programs, donations to political parties, profit-oriented activities, events conducted with participation fees, rallies, or advertisements. Additionally, expenses incurred for institutions linked to the bank’s founders, board members, or senior executives, as well as expenditures tied to business expansion conditions, will not be recognized as CSR spending.

CSR spending must target non-profit initiatives

The budgetary allocation under CSR must be directed toward government, community, or other non-profit institutions. When selecting projects or programs for CSR spending, institutions must assess their impact on the community and national needs. The guidelines prohibit CSR funds from being distributed as cash donations, grants, charitable gifts, or prizes. Furthermore, such funds cannot be transferred to other funds or counted as capital reserves.

Revised CSR Fund allocation rules

Previously, the BFIs were required to earmark at least one percent of their net annual profit to CSR and spend the entire amount within the same fiscal year. The new guidelines revise this provision. Banks and financial institutions must now allocate a percentage of their net annual profit, as determined by the NRB, into the CSR fund.

With the approval of their board of directors,  such institutions may deposit amounts exceeding the prescribed percentage into the CSR fund and use them for CSR-related activities. Furthermore,  it is mandatory for the licensed institutions to ensure that at least 60 percent of the funds deposited from annual profits are utilized within the same fiscal year after their financial statements have been approved.