All foreign contributions and donations in India are governed and regulated under the Foreign Contributions (Regulations) Act, 2010 (FCRA). On May 18, 2021, the Ministry of Home Affairs (MHA) issued a public notice where it mandated the creation of a designated “FCRA Account” opened with the SBI following which all foreign contributions must be received to the FCRA account. No other account is permitted to receive foreign contributions and donations. Based on this notice, the RBI on 16th February 2023 made several changes to the NEFT and RTGS systems for the FCRA-related transactions. Following the changes, all beneficiaries must hold a designated “FCRA Account” at the State Bank of India’s (SBI) New Delhi Main Branch (NDMB) to directly receive foreign contributions and donations through the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system and the Indian NEFT and RTGS systems.
The RBI has further mandated SBI to capture all details of the donor such as name, address, country of origin, amount, currency, and purpose of remittance for transactions, which are supposed to be reported to the MHA by the SBI on a daily basis. Member banks are advised to incorporate the required changes in their core banking solutions to capture the requisite details while forwarding the foreign donations through NEFT and RTGS systems to SBI. As per the notification, the proposed changes are issued under Section 10 (2) read with Section 18 of the Payment and Settlement Systems Act, 2007 and shall be made effective from March 15, 2023.
These changes arise following a series of amendments proposed by the Central Government since 2014 to the FCRA in order to monitor all funds, contributions, and donations arriving from foreign entities to Indian beneficiaries. One such landmark move includes the cancellation of registration of about 2,000 Non-Governmental Organisations (NGOs) as of 2021. Thus, this notification by the Reserve Bank of India is a significant reflection of the policy adopted towards foreign contributions and donations by the government of India.