Yes Bank in red yet again! Fails to spend more than 50% of CSR budget, report shows lack of justification for non-spending

New Delhi, 26 August 2020: Private lender Yes Bank has failed to meet its CSR obligation in the year 2019-20. The financial institution which was required to spend a total of Rs 83.19 crore on CSR activities in the financial year 2018-19, could only spend Rs 40 Crore for the purpose.

Though the company’s CSR policies are completely aligned with the UN’s Sustainable Development Goals, its actions remained non-aligned with its CSR commitments.

The money spent on the CSR activities by the bank included a fund of Rs 10 crore directly contributed to the PM CARES. Further, had it not contributed to the PM CARES, its spend might have fallen to a dismal 30% of its overall CSR obligation during the year.

The bank’s average net profit before tax for the last three years stood at Rs 4,100 crore. Accordingly, the prescribed CSR budget, calculated as 2% of the average annual profit of the last three years, came out to be Rs 83.19 crore.

As per the company, "the reason for not spending the prescribed and budgeted 2% is on account of delays in identified project approvals, the factors leading up to the moratorium which resulted in delayed fund deployment to implementation partners, and the RBI imposed moratorium on YES BANK which was an unforeseen instance."

However, the reasons cited by the company for not spending the prescribed amount, do not hold the ground.

CSR allocated fund remain unspent for majority of projects

While the company proudly boasts its CSR policies and its ‘unique, multi-pronged approach’ towards delivering exponential CSR impact, the fund allocation and project implementation present an entirely different picture.

Despite having a Corporate Social Responsibility (CSR) committee which plans, executes and monitors its social investments through structured governance and transparent performance, the Bank could spend only Rs 40.54 crore (0.97 %) vis-a-vis budgeted Rs 83.19 crore (2%), towards CSR as per Section 135 of the Companies, Act, 2013.

Last year also, the company had defaulted on its prescribed CSR budget. It only spent Rs 53.89 crore against a prescribed CSR budget of Rs 95.58 crore. Thus, the company only followed its last year pattern on CSR spend.

A detailed analysis of the Bank’s CSR implementation report reveals that it could not spend 88 % of its planned budget outlay on projects related to ‘livelihood enhancement’ planned for Sikkim, Madhya Pradesh, Rajasthan, Assam,Maharashtra,Delhi and NCR.

It failed to spend around 75 % of the budget outlay on the projects related to ‘environment sustainability.

*Source: YES BANK Annual Report 2019-20

Can RBI-imposed moratorium be a justifiable reason?

While filing for its inability to spend its allocated CSR fund on its planned projects, the bank cited RBI-imposed moratorium as one of the key reasons for overall lower spending this year.

However, the moratorium was imposed upon the YES Bank only in the month of March which happens to be the last month of the financial year. There were no such restrictions during the remaining 11 months of the financial year. Further, the said moratorium was just for a brief period of less than a fortnight.

On March 5, the Reserve Bank of India (RBI) had imposed a moratorium on the private lender, restricting withdrawals to Rs 50,000 per depositor. The restrictions were lifted within a fortnight On March 18, allowing the bank to resume its normal operation the same day.

Thus, the RBI-imposed moratorium as one of the reasons for spending half of the overall CSR budget hardly seems to be justifiable.

Delayed approvals despite serious approach and regular CSR Committee meetings

The key reason for the unspent allocated amount was ‘delayed project approvals’, the bank cited. The cause for delayed project approval also seems a poor excuse as the Bank’s Corporate Social Responsibility Committee held three meeting in the FY 2019-20 i.e. on April 25, 2019, July 16, 2019 and October 10, 2019 to review and monitor its CSR projects.

The facts above stand in contrast with Yes Banks’s tall claim: "As a public trust institution, being a responsible corporate citizen is a part of Yes Bank’s core values. With prudence it has been undertaking and investing in CSR projects that are unique, scalable and sustainable, continuously delivering large scale impact."

The basic question is how you continue to create large scale impact when your CSR implementation plan itself is half-hearted.