FCRA Amendment Bill 2026: What India's NGO Foreign Funding Overhaul Means for Non-Profits

The Foreign Contribution (Regulation) Amendment Bill, 2026 was introduced in the Lok Sabha on March 25, 2026. The Bill proposes significant changes to the framework governing how non-governmental organisations, trusts, societies, and other non-profit entities in India receive, hold, and utilise foreign contributions. The amendments affect registration, sub-granting, asset management, personal liability of key functionaries, and penalties. For any organisation that receives or plans to receive foreign funding, understanding these changes is critical.

Designated Authority for Asset Management

One of the most consequential changes in the Bill is the creation of a new government power to appoint a designated authority to take over, manage, and dispose of assets created out of foreign contributions received by an NGO whose FCRA registration has been suspended, cancelled, or not renewed. Under the current framework, when an organisation's FCRA registration lapses or is revoked, the position of assets created from foreign funds remains legally uncertain. The Bill fills this gap by allowing the government to step in, manage those assets, and direct the proceeds from any sale to the Consolidated Fund of India. This is a substantial expansion of executive power over the foreign-funded assets of non-profit organisations.

Expanded Personal Liability: The Key Functionary Definition

The Bill significantly expands the definition of a key functionary who can be held personally liable for FCRA offences. Under the amended definition, key functionaries include directors, partners, trustees, the karta of a Hindu Undivided Family, office-bearers of societies and trade unions, and any person who exercises control over the management of the organisation. These individuals will be personally liable for violations unless they can demonstrate that the offence was committed without their knowledge and that they exercised due diligence to prevent it. This reverse burden of proof is an important feature: personal liability is presumed and the individual must rebut it. Non-profit leaders and board members must therefore ensure robust internal compliance mechanisms are in place.

SBI Sole Account Requirement, Sub-Granting Restrictions, and Deemed Cessation

The Bill formalises the requirement that all foreign contributions must be received exclusively in a designated account held with the State Bank of India's New Delhi main branch. This is an existing administrative requirement that the Bill now codifies into statute. On sub-granting, the Bill restricts the transfer of foreign funds to other organisations to cases where the recipient itself holds a valid FCRA registration. Informal sub-granting arrangements or transfers to unregistered entities will not be permitted. The Bill also introduces a new concept of deemed cessation of FCRA registration. Under proposed Section 14B, an organisation's registration automatically ceases in three situations: it fails to apply for renewal before the expiry date, its renewal application is rejected, or the validity period expires without renewal. The government will also have power to set time-bound timelines for the receipt and utilisation of foreign contributions, preventing indefinite accumulation of foreign funds without deployment.

Reduced Imprisonment, But Greater Administrative Exposure

In one area, the Bill reduces the severity of penalties: the maximum imprisonment for FCRA offences is proposed to be reduced from five years to one year, with rationalised financial penalties accompanying the change. However, organisations and their functionaries should not interpret this as a general liberalisation of the FCRA regime. The combination of expanded personal liability, asset seizure powers, deemed cessation provisions, and sub-granting restrictions collectively tightens the overall regulatory framework. The reduction in maximum imprisonment may in practice be accompanied by more active enforcement through civil penalties and asset management orders, which do not require a criminal conviction.

Practical Takeaways

The Bill is before Parliament and is not yet law. Organisations regulated under FCRA should immediately audit their renewal timelines to ensure no registration is at risk of lapsing. Sub-granting arrangements should be reviewed to verify that all recipient organisations hold valid FCRA registrations. Boards and governing bodies should be briefed on the expanded personal liability provisions and the due diligence defence requirements. Any organisation that has accumulated significant foreign contribution-funded assets should assess how the proposed asset management powers could affect it in the event of a registration lapse. Legal advisers working with the non-profit sector should map their clients' exposure across these amended provisions and advise on governance and documentation practices that support a credible due diligence defence.