Various bonds rating from single C to AAA | Photo Credit: Chunumunu
The Finance Ministry may not be averse to channelising of CSR monies into Social Impact Bonds (SIBs) or Development Impact Bonds (DIBs), a top official has said.
“DIBs or SIBs where there is no return on investment, but there is a payout in terms of outcome.. it shouldn’t be a problem at all even under current CSR framework. We will have a detailed discussion with Corporate Affairs Ministry to support and enable this,” K Rajaraman, Additional Secretary, Department of Economic Affairs in Finance Ministry, said during the second IVCA Impact and Sustainable Investment Conference, organised in partnership with NIIF and Eversource Capital.
Development impact bonds are a performance-based investment instrument that finance development programmes (in low resource countries) with money from private investors who earn a return if the programme is successful. On the other hand, SIBs are contracts where private investors funds are utilised to fund social services through performance-based contracts.
“We can discuss this with (MCA) and take it forward and see if there is a way to operationalise it,” Rajaraman said.
CSR framework
He highlighted that current Corporate Social Responsibility (CSR) framework is focussed on spending of the money and not about returns on the money allocated for such spend.
“CSR now is seen as a give away with no for-profit motive. SIB where there is no return on investment but payout is in terms of outcomes it should not be a problem at all for CSR monies to flow into them,” he said.
Rajaraman also said the Finance Ministry was open to the idea of looking at ways where limited or conditional profit could be realised on the CSR spend. “This could help leverage private capital and its an opportunity. We can look into this,” he added.
Published on July 6, 2021