FCRA Compliance for NGOs and Nonprofits in India: What Every Organisation Must Know

The Foreign Contribution (Regulation) Act, 2010, commonly known as FCRA, governs the receipt and utilisation of foreign contributions by Indian associations, trusts, societies, and companies registered under Section 8 of the Companies Act. The legislation has been significantly tightened through the Foreign Contribution (Regulation) Amendment Act, 2020 and subsequent regulatory changes. Non-compliance with FCRA is treated seriously by the Ministry of Home Affairs, which has cancelled the registrations of thousands of organisations in recent years. For NGOs, charitable trusts, research institutions, and civil society organisations that receive foreign funding, maintaining FCRA compliance is existential.

Who Needs FCRA Registration and Who Is Prohibited

Any organisation that wishes to receive foreign contributions for a definite cultural, economic, educational, religious, or social programme must register under FCRA with the Ministry of Home Affairs. The 2020 amendment significantly restricted the categories of organisations that can receive FCRA funds. Organisations involved in election matters, government employees, members of the legislature, judges, and political parties are absolutely prohibited from receiving foreign contributions. The amendment also introduced a prohibition on sub-granting, meaning an FCRA-registered organisation can no longer transfer received foreign funds to another organisation, even if that other organisation is separately FCRA-registered, without specific prior approval. This has significantly complicated the funding models of large NGOs that previously operated through grant-making to smaller partner organisations.

The SBI New Delhi FCRA Account Requirement

One of the most operationally significant changes introduced by the 2020 amendment and subsequent rules is the mandatory requirement for all foreign contributions to be received only in a designated FCRA account held at the State Bank of India, New Delhi Main Branch. This is the sole account through which all incoming foreign funds must first flow, regardless of which bank the organisation uses for its operations. Organisations were required to open this specific SBI account by specified deadlines. Any foreign contribution received in any other account, even an existing dedicated FCRA account at another bank, is treated as a violation. Organisations that missed the transition should take immediate steps to regularise their position, as receipt of foreign funds in a non-compliant account can result in registration cancellation.

Administrative Expense Limit and Utilisation Rules

The 2020 amendment reduced the permissible use of foreign contributions for administrative expenses from 50 percent to 20 percent of total foreign contribution received in a financial year. Administrative expenses include salaries, office rent, travel for administrative purposes, and overhead. If an organisation wishes to exceed this 20 percent limit, it must obtain prior approval from the Central Government with detailed justification. The restriction has forced many organisations to restructure their operating models, recategorise certain expenses as programme costs, and tighten overhead management. The Ministry of Home Affairs has been vigilant in examining utilisation returns, and organisations with administrative expenditure exceeding 20 percent without approval face cancellation risk.

FCRA Renewal and Compliance Filings

FCRA registration is not permanent. It must be renewed every five years. The renewal application must be filed three to six months before the expiry of the existing registration. Failure to renew on time results in the registration lapsing and the organisation losing its ability to receive foreign contributions. Every FCRA-registered organisation must also file an annual return in Form FC-4 on the FCRA online portal by December 31 each year, reporting all foreign contributions received and their utilisation during the preceding financial year. Organisations must also maintain separate accounts for foreign contribution receipts and utilisation and have these accounts audited annually by a chartered accountant.

Practical Takeaways

All FCRA-registered organisations should immediately verify that their foreign contributions are being received only through the designated SBI New Delhi Main Branch account and that their online FCRA registration and bank details are correctly updated on the FCRA portal. Annual utilisation returns should be filed on time and reconciled against audited accounts. Organisations that rely on sub-granting as part of their programme delivery model should seek specific legal advice on how to restructure their funding chains. Any organisation whose registration has lapsed or been cancelled should explore the compounding and reinstatement mechanisms available under FCRA before resuming any foreign funding activities. Given the Ministry of Home Affairs' active enforcement posture, proactive compliance is far less costly than remediation after a cancellation notice.