CSR is Changing From Disbursing to Utilisation to Impact - CSR

Via latest silent amendment in CSR, subscription to zero coupon zero principal instruments issued by NGOs on social stock exchange is allowed as CSR spent.

In 2021, CSR Rules officially took departure insisting

1. 1. CSR is not disbursement of funds to NGOs but it is actually utilisation of those funds for the designated purpose specified as per CSR Policy and annual action plan approved by company.
2. Every large CSR project required impact Assessment

In 2022, social stock exchange became operational where NGOs were facilitated to raise funds via zero coupon zero principal instruments [zero coupon + zero debt]. Which required impact agency to give periodic report.

Vide the latest change, MCA marries two

1. Once subscribed by instruments issued by NGO on SSE it is treated as CSR and no need for company to monitor use in same year
2. Impact Assessment becomes responsibility of NGO and not company

As of now companies are allowed to use only 10% of its CSR obligation. But if successful, MCA will most likely keep increasing this %.

This can probably change whole dynamics of CSR

1. Impact becoming mandatory irrespective of CSR disbursement by companies
2. Corporates will be administrative relieved from CSR compliance monitoring
3. More organised and developed and scalable NGOs will emerge
4. CSR will become easy, transparent, better governed