The Foreign Contribution (Regulation) Act (FCRA) is a national security law enacted to consolidate the law regulating the acceptance and utilization of foreign contribution or foreign hospitality by individuals, associations, or companies.

Basic Details

  • Enacting Authority: Parliament of India (First enacted in 1976; re-enacted in 2010).
  • Nodal Ministry: Ministry of Home Affairs.
  • Validity of Registration: 5 years (subject to periodic renewal).
  • Mandatory Banking Channel: Designated FCRA account at the State Bank of India, Main Branch, New Delhi.
  • Major Amendment: The Foreign Contribution (Regulation) Amendment Act, 2020 barred registered entities from sub-granting foreign funds to any other association and tightened administrative-expense limits.

Key Statutory Provisions

  • Prohibited Recipients: Prohibits electoral candidates, journalists, judges, public servants, and members of legislatures from accepting foreign contributions.
  • Prior Permission and Registration: Requires NGOs to obtain a registration certificate or prior permission from the Ministry of Home Affairs before receiving foreign funds.
  • Cap on Administrative Expenses: Limits the use of received foreign contributions for administrative expenses to a maximum of 20%.
  • Prohibition on Transfer: Strictly prohibits the transfer of foreign funds received by a registered entity to any other association or individual, a bar introduced by the 2020 Amendment.

Significance

  • Single Bank Channel as a Monitoring Tool: By requiring every foreign contribution to route through one designated SBI account in New Delhi before reaching an organisation's own account, the Act gives the Ministry of Home Affairs a single choke point to monitor inflows, instead of relying on decentralised reporting across hundreds of bank branches.
  • 20% Cap Shapes NGO Spending: Because the Act limits use of foreign funds for administrative costs to 20%, an NGO receiving a large foreign grant must direct at least four-fifths of it to direct project activity — breaching this specific cap is one of the most common grounds on which the Ministry cancels FCRA registrations.
  • Registration Cancellations Are Frequent: Over 20,700 FCRA registrations have been cancelled since 1976, most for non-filing of mandatory annual returns — precisely the gap the 2026 Amendment Bill's new Designated Authority provision is meant to address, by giving the government a clear process for the foreign assets an organisation is left holding after cancellation.