NEW DELHI: The corporate affairs ministry has rejected a proposal by the finance ministry to exempt banks from 2 per cent mandatory corporate social responsibility (CSR) norms owing to their capital constraints. Both the ministries are headed by Arun Jaitley , who is also the defence minister Confirming the arm’s-length dealing or independent stand on policy issues in the two ministries headed by the same Cabinet minister, a senior official of the ministry of corporate affairs (MCA) said there was no case for any such exemption.“The Companies Act, 2013 has to be followed in letter and spirit,” the official said on condition of anonymity, adding that the finance ministry would soon be apprised of the MCA’s view.“We have to go by the existing legal framework,” said the official, refusing to comment on whether having a common minister would lead to early resolution of issues between the two ministries.Earlier this year, the finance ministry had written a letter to MCA seeking temporary relief from mandatory CSR for banks till the economy improved. MCA received similar requests from representatives of non-banking financial companies too. The ministry had cited “poor economic growth and increasing capital requirements of commercial banks”.According to the Reserve Bank of India , scheduled commercial banks will together need an additional capital of Rs 5 lakh crore to comply with Basel-III capital adequacy regulations. Of this, equity capital requirement will be of Rs 1.75 lakh crore and non-equity capital of Rs 3.25 lakh crore.Under the present structure, private sector banks, old private sector banks and foreign bank branches are incorporated under the Companies Act whereas state-run banks are incorporated under the Nationalised Bank Act Banks are, therefore, required to follow CSR norms that say a company must spend 2 per cent of profits on CSR from the current fiscal if it has a turnover of Rs 1,000 crore or more, or net worth of Rs 500 crore-plus, or net profit of Rs 5 crore or more.“The whole banking sector is under stress. Asking private banks alone to comply with the new norms is unjust,” said a senior official with a private sector bank, who did not wish to be identified.The gross non-performing assets or NPAs in private sector banks stood at Rs 22,744 crore at the end of March, an increase of 13.76 per cent over the previous year. RBI has not earmarked any amount that needs to be spent towards CSR, leaving it to the wisdom of the bank boards.