Corporate Social Responsibility and Corporate Governance

Corporate Social Responsibility (CSR)

Philosophy

Varthana Finance Private Limited (Formerly Thirumeni Finance Private Limited) (‘Varthana’, ‘the Company’) recognizes that business enterprises are economic organs of the society and draw on the societal resources; it is this belief that a Company’s performance must be measured by its contribution to building economic, social and environmental capital towards enhancing societal sustainability.
In line with this belief, the Company continues to and shall further endeavor to undertake Corporate Social Responsibility (‘CSR’) programs which shall be replicable, scalable and sustainable. These programs, projects and activities (collectively called ‘CSR Programs’) carried out in this regard are the subject matter of this Policy.

CSR Vision and Guiding Principles

  • Our CSR vision is to work for the welfare and sustainable development of the community in and around our areas of operation, besides need based response to the requirements in other parts of the country.
  • The Company will observe in letter and spirit the cardinal principles and underlying objectives of the Government in prescribing CSR and for this purpose strive at all times to design CSR programs within the broad scope of the activities listed under Schedule-VII to the Companies Act, 2013 as amended from time to time.
  • The Company shall endeavor to adopt best practices and integrate them into its CSR activities.

Program areas

The Company will focus on the following programs in line with Schedule VII read with the Section 135 of the Companies Act, 2013 and rules thereunder:

(i) Eradicating extreme hunger and poverty

(ii) Promotion of education

(iii) Promoting gender equality and empowering women

(iv) Reducing child mortality and improving maternal health

(v) Combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases

(vi) Ensuring environmental sustainability

(vii) Employment enhancing vocational skills

(viii) Social business projects

(ix) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women

(x) Such other matters as may be prescribed

Implementation

To implement the Company’s CSR Programmes through Company personnel or through proposed Charitable Trust or through Section 8 companies that may be established by the Company from time to time. The Company may also consider implementing one or more CSR programs through Registered Trust, Society or Section 8 companies (i.e. a Company registered under Section 8 of the
Companies Act, 2013) with an established track record of at least three years in carrying out the activities in related areas.

Monitoring Mechanism/Due Diligence on CSR Expenditure

  • The monitoring of CSR activities of the Company will be undertaken by the CSR Committee of the Company on a periodic basis on the activities undertaken and the amount of expenditure incurred on such CSR activities.
  • The Committee may either on their own and through their delegated representatives can make periodic visits to the CSR sites to ascertain the progress of the CSR Projects/Programmes.
  • The Committee shall also have the right to inspect and audit the books of accounts, records and other documents of the Company pertaining to the CSR activities of the Company.
  • A report on CSR activities shall be prepared by the Committee on a yearly basis which shall form part of the Annual Report of the Company.

Review

The CSR Committee will review on periodic basis the policy and suggest changes, if and when required. The Board inturn will consider same on the basis of recommendations so received.

 

Corporate Governance

The Board of Directors at its meeting held on 8th May, 2018 adopted the Corporate Governance Guidelines as required under the Non-banking Financial Companies – Corporate Governance (Reserve Bank) Directions, 2015.

The Board of Directors (‘the Board’) along with its Committees shall provide leadership and guidance to the Company’s management and direct, supervise and control the performance of the Company. The Board of the Company shall have an optimum combination of Executive and Non-Executive directors in compliance with the Companies Act, 2013 and other regulatory guidelines, if any.

The Board functions as a full Board and also through various Committees constituted to oversee specific areas.
The Committees have oversight of operational issues assigned to them by the Board. Accordingly, the core Committees constituted by the Board in this connection are as follows:

I. Audit Committee:

The Audit Committee has been constituted under provisions of Section 177 of the Companies Act 2013 and in terms of relevant RBI guidelines and such other applicable regulations in this regard and would have duties, obligations and powers as may be prescribed as per the provisions of Act and the relevant regulations and as may be prescribed by the Board from time to time. The Committees terms of reference includes review of auditor’s independence and performance and effectiveness of audit processes, evaluation of internal financial controls and risk management systems including performance of Internal Auditor and such other matters.

II. Nomination and Remuneration Committee (NRC):

The NRC has been constituted in compliance with the provisions of Section 178 of the Companies Act and other regulatory guidelines issued in this regard from time to time and would have duties, powers and obligations as per the provisions of the Act and the relevant regulations and directions from the Board. The terms of reference for the Committee includes ensuring fir & proper status for the existing and proposed directors, assess independence of the independent directors, recommend to the Board policy on remuneration for directors, Key Management Personnel and senior management, review overall HR policy, strategy and practices and related matters.

III. Risk Management Committee:

The Risk Management Committee has been constituted in accordance with the RBI guidelines in this regard. The Committee is responsible for identifying, controlling and mitigating various risk including credit risk, liquidity risk, operational risks, compliance risk, market risk and such other functions as may be assigned to it by the Board of the Company. Further, the Risk Management Committee shall ensure that progressive risk management system and risk management policy and strategy followed by the Company are put in place.

IV. Asset Liability Management Committee:

The Company has in place the Asset-Liability Management Committee (‘ALCO’) constituted in accordance with the RBI guidelines. The ALCO’s primary goal is to evaluate, monitor and approve practices relating to risk due to imbalances in the capital structure. The Company has a Board approved Asset Liability Management Policy in place and required disclosures to the effect are made from time to time

V. Other Committees:

In addition to the aforesaid Committees, the Company has also constituted the following Committees:
a) IT Strategy Committee
b) Corporate Social Responsibility Committee
c) Credit Committee
d) Borrowing Committee
e) Customer Grievance and Redressal Committee
All the above committee of the Board have such meeting frequencies, quorum, number of members, etc. as detailed in the ‘Terms of Reference’ approved by the Board of Director of the Company from time to time.

Disclosure, Transparency & Rotation of partners of the Statutory Auditors:

The Company has as a system for disclosure to the Board at regular intervals on the following:

a) The progress made in putting in place a progressive risk management system and risk management policy and strategy followed by the Company

b) Conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.

c) Make the necessary disclosures in the Annual Report as required under the aforesaid Directions

d) Rotation of the partner/s of the firm of statutory auditors in terms of the provisions of Section 139 and 141 of the Companies Act, 2013 and in accordance with the applicable RBI guidelines as amended from time to time