Vidyadhar V. Anaskar, Administrator, has approached the Reserve Bank of India (RBI), raising concerns over the alleged misuse of Corporate Social Responsibility (CSR) funds by certain private sector banks to secure deposits from Zilla Parishads, Municipal Corporations, Municipal Councils and other government and semi-government institutions.
In a detailed representation, addressed to the RBI Governor, Anaskar has sought an independent investigation into the reported practices and appropriate regulatory action if the allegations are established.
According to the representation, certain private banks are reportedly extending financial assistance and providing facilities to local self-government institutions under the banner of CSR activities.
These include air conditioners, vehicles for official use, computers, furniture, office equipment and other infrastructure facilities. Anaskar has expressed concern that such assistance may be linked, directly or indirectly, to expectations of securing substantial deposits from beneficiary institutions.
Questioning the intent behind such expenditure, he has asked whether these initiatives genuinely serve social welfare and public development or are being used as indirect commercial inducements to influence deposit-placement decisions.
Referring to Section 135 of the Companies Act, 2013, read with the Companies (CSR Policy) Rules, 2014, Anaskar has emphasised that CSR expenditure must comply with the prescribed statutory framework. He has argued that using CSR resources primarily to obtain commercial benefits or institutional deposits raises serious questions about the legality and propriety of such expenditure.
Highlighting the implications for cooperative banks, Anaskar said such practices, if established, could create an uneven competitive environment.
Cooperative banks largely mobilise deposits through their own capital, members’ participation, competitive interest rates, financial soundness, quality customer service and long-standing institutional relationships. Unlike large corporate banking institutions, they do not ordinarily have comparable CSR expenditure mechanisms.
He cautioned that using CSR-funded facilities to influence deposit decisions could place cooperative banks at a significant competitive disadvantage and undermine fair competition in the banking sector.
The representation also raises concerns over ethical banking, transparency and responsible management of public money. Anaskar has observed that if such arrangements involve personal benefits, commissions, kickbacks or other undue advantages to officials handling deposit-related decisions, they could attract action under applicable laws.
Seeking RBI intervention, he has urged the regulator to examine the reported practices, investigate the source and purpose of the CSR expenditure and take appropriate steps to prevent its misuse as an indirect instrument for deposit mobilisation or securing preferential access to public funds.
