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Donations by banks- RBI guidelines dated 21st December 2005

Now, the policy relating to donations given by banks to various entities may be formulated by the banks’ Boards of Directors, keeping in view the following general principles laid down by RBI:

i. The profit making banks may make donations during a financial year aggregating upto one per cent of the published profit of the banks for the previous year. In some cases, banks create funds for specific purposes to encourage research and development in fields related to banking. The Board of the banks may determine the amount of contribution to be made to such funds. The contribution made to such funds in a year will be reckoned for computation of the one percent ceiling.

ii. The donations out of the research and development funds should normally be made for setting up professional chairs, granting fellowships/ scholarships for studies and research at universities and approved institutions and for commissioning special projects for investigation, analysis and research for areas pertaining to banking, finance, statistics, management and economics, etc.

iii. The donations to Prime Minister's National Relief Fund (Procedure to be followed for remitting the contributions / donations to the fund is indicated in the Annexure) and subscriptions / contributions to professional bodies / institutions related to banking industry like Indian Banks' Association, National Institute of Bank Management, Indian Institute of Banking and Finance, Institute of Banking Personnel Selection and Foreign Exchange Dealers’ Association of India may be excluded from the limit indicated in para (i) above.

iv. Loss-making banks can make donations totalling Rs.5 lakh only in a financial year including donations to exempted entities / funds indicated in para (iii) above.

v. Unutilised portion of the limit of one percent should not be carried forward to the next year.

vi. The banks may continue to submit annual review of donations to their Boards of Directors, as hitherto.

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