The finance ministry has written to the corporate affairs ministry, asking the latter to exempt banks from the corporate-social responsibility spending mandated by the Companies Act.
The Act, which came into effect from the current financial year, mandates companies to spend at least two per cent of their average net profit for the immediately preceding three financial years on CSR activities.
The CSR provisions within the Act are applicable to companies that have annual turnover of Rs 1,000 crore (Rs 10 billion) or more, or net worth of Rs 500 crore (Rs 5 billion) or more, or net profit of Rs 5 crore (Rs 50 million) or more.
Almost all commercial banks have made profits of more than Rs 5 crore in the past three financial years.
The Act also requires companies to set up CSR committees comprising their board members, including at least one independent director.
Profitability growth of bank groups differed significantly last financial year.
The new private banks were able to maintain a healthy growth rate of 19.7 per cent in their profit after tax during 2013-14, compared to a contraction of 30.7 per cent in the net profits of public-sector banks during the year.
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