Banks Spend More Than They Have to on Corporate Social Responsibility but Two Third of the Fund Is Spent Only in Bagmati

Nepal Rastra Bank has published a report after conducting a study on corporate social responsibility in Nepal's banking industry. The study was conducted with the objective of examining the realities of corporate and social responsibility practices of banks and financial institutions and the implementation status of the directives issued by the central bank in this regard.

This study has been done on the basis of the annual report of the banks and financial institutions, the data submitted to the Nepal Rastra Bank as well as the online survey conducted from Kartik 20 to Mangsir 26, 2077 BS. According to the study, it is seen that 1.58 percent of the net profit of 2075/76 has been deposited in the Institutional Social Responsibility Fund, which is more than the minimum 1 percent of the net profit specified by the central bank.

Class A commercial banks deposited an average of 1.54 percent, Class B development banks 1.55 percent, Class C finance companies 1.66 percent, and Class D microfinance institutions 2.01 percent in the corporate social responsibility fund. The study has shown that BFIs direct the majority of the fund to "Image Building." It was seen that 85 percent have their own corporate social responsibility policy and 51 percent have annual plans.

However, it was seen that the expenditure from the Institutional Social Responsibility Fund has not been balanced at the regional and provincial levels. Despite improvements, more than two-thirds of the social responsibility fund is spent in Bagmati. As such, the central bank feels there is a need for clear guidance and direction on social responsibility to balance geographical and regional and spend in a transparent manner.