The Supreme Court has directed the Government of Nepal to ensure that Corporate Social Responsibility (CSR) funds are allocated specifically to benefit populations living below the poverty line. The court emphasized that spending should be prioritized for communities facing extreme poverty and directed immediate implementation of this measure.

According to Nepal's Fourth Living Standards Survey (2019/20), 20.27 percent of the population lives below the poverty line. The court mandated that CSR funds, including those deposited in institutional social responsibility accounts, should be used to support the housing, education, health, and welfare of these communities. This includes the development of local infrastructure, construction of private toilets and bathing facilities, and other basic human needs.

The order was issued by Justices Hari Prasad Phuyal and Nripa Dhwoj Niroula in a ruling dated December 2, 2024, the full text of which was released recently.

The case originated after the Nepal Rastra Bank (NRB), on July 28, 2020, instructed microfinance institutions to transfer all CSR funds remaining as of mid-July 2020 to the government's COVID-19 Relief Fund. A group led by advocate Shashi Basnet filed a petition challenging this directive, arguing it violated the Constitution and prevailing laws.

The Supreme Court invalidated the NRB’s directive, ruling that CSR funds must be spent solely for poverty alleviation. It also instructed authorities to take appropriate action if such funds have been misused, including being directed toward private projects or institutional operations.

Additionally, the court ordered NRB to amend relevant CSR regulations to strengthen transparency and accountability in how financial institutions manage these funds. It further directed the Ministry of Industry, Commerce and Supplies to monitor CSR spending by businesses and ensure the funds are effectively contributing to poverty reduction.