What Is FCRA Account?

Hey Pal,

The Foreign Contribution Regulation Act 1976, which is the FCRA full form in banking, places restrictions on banks' acceptance of inbound remittances from abroad for subsequent credit to the accounts of groups and organisations in India.

To understand more about what is FCRA account, I would like to say that the Central Government ordered all Non-Governmental Organizations (NGOs), corporate organisations, and people who fall under the purview of FCRA 2010 to create bank accounts with any bank that has connected its system with the Public Financial Management System in a notice dated December 21st, 2017. (PMFS).

It further said that the procedure had to be finished within a month of the notice's publication.

After understanding what is FCRA bank account, let us move on to the eligibility criteria for a FCRA savings account:

• Organisations looking to receive foreign donations for specific cultural, social, economic, educational, or religious programmes may register with the FCRA or use the "prior approval" approach to receive foreign contributions.

• A Trust, Society, or Section 8 Company is preferred as an FCRA applicant.

All current KYC requirements that apply to opening Current Accounts will be required.

additionally, authorization or certification from the Home Ministry to receive foreign contributions through a new FCRA account.

The Reserve Bank has often urged banks to carefully follow the guidelines in the FCRA of 1976. An appended list of previous circulars published in this regard is included. It is emphasised once more that banks must make sure they properly abide by the

FCRA, 1976 rules and follow the method listed below when accepting foreign contributions. The following rules should be followed as a result: 

• Banks should demand prior approval from the Central Government before accepting a foreign contribution in the accounts of entities covered by Sections 4 and 5 of the FCRA, 1976; 

• They should only grant credit for the proceeds of cheques or draughts representing foreign contributions if the association, etc., as specified in Section 6 of the Act, are registered with the Ministry of Home Affairs, Indian Government.

• If the association is not registered under the Foreign Contribution (Regulation) Act of 1976, they should demand the production of a communication from the Ministry of Home Affairs confirming the Central Government's prior approval before accepting a specific amount of foreign contribution; 

• They should withhold credit from accounts of associations that are not separately registered with the Ministry of Home Affairs for the purpose of accepting foreign contributions.

• Unless a letter containing the prior permission of the Central Government under the Foreign Contribution (Regulation) Act, 1976 is produced by such organisations, they should not permit credit of the proceeds of cheques, demand drafts, etc., to organisations of a political nature that are not political parties (including their branches and units).

• In order to prevent unwarranted harassment of these associations, banks should record the registration number provided by the Ministry of Home Affairs to the various associations in the pertinent records, particularly the pages of the ledgers in which the foreign contribution accounts of the associations are maintained.

I would like to conclude here about various aspects of FCRA like FCRA full form in banking, eligibility, documentations, and procedure to receive foreign contribution and the rules to be followed while accepting foreign contribution.

Read More: