The Ministry of Corporate Affairs has decided to put in place a centralised system to keep a tab on entities' compliance with CSR obligations under the companies law, according to sources.
The move comes against the backdrop of rising instances of non-compliance with Corporate Social Responsibility (CSR) requirement.
Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities. In case of failure to meet the requirement, reasons have to be furnished by the entities concerned.
Sources said the ministry has asked three officials to look at the filings to check compliance of companies with CSR provision and they would carry out the inspection on a zone-wise basis.
Such a system would help in keeping a tab on compliance in a centralised way, they added.
Presently, Registrar of Companies (RoC) is responsible to check whether entities concerned are complying with norms pertaining to social welfare spending activities under the Act.
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The three-member team would be operating out of the CSR cell at the ministry, which is implementing the Companies Act, sources said.
Last year, the ministry had sought explanation from many companies as they were found to not have complied with CSR norms.
As per the official data, 6,286 companies spent Rs 4,719 crore towards various CSR activities in 2016-17. The total number of such projects taken up stood at 11,597.
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