FCRA Registration in India

Process, Compliance & Common Mistakes NGOs Must Avoid

For non-profit organisations in India that seek to receive donations or contributions from foreign sources, compliance with the Foreign Contribution (Regulation) Act, 2010 (“FCRA”) is essential. The act regulates the acceptance and utilisation of foreign contributions by associations, trusts, societies, and companies, and ensures they are not used for activities detrimental to national interest.
Without FCRA registration (or appropriate prior permission), an organisation cannot legally receive foreign funds; any breach may attract cancellation of registration, freezing of bank accounts and serious reputational risk.
This article provides a detailed guide to the registration process, ongoing compliance after registration, and common mistakes that NGOs make — with a focus on practical guidance for avoiding risk.

Types of FCRA Registration & Eligibility Criteria

Two routes: Registration & Prior Permission

• FCRA Registration (form FC-3): Organisations that have been in existence for a specified period and fulfill conditions may apply for full registration.
• Prior Permission (form FC-3A/FC-3B): Newly formed organisations or those seeking foreign contribution for a specific activity/source may apply under the “prior permission” route.

Key Eligibility/Pre-conditions

Some of the conditions include:

• The organisation must have registration as a Trust, Society or Section 8 Company under the relevant Indian law.
• The organisation should have worked for at least three years (in some cases) and have audited accounts.
• The organisation must specify the aims and objectives clearly and must not be involved in any activity detrimental to national interest.
• After registration or prior permission, the organisation must maintain a designated bank account for foreign contributions (often in the State Bank of India, Main Branch, New Delhi) and ensure utilisation accounts.

Step-by-Step Process for FCRA Registration

1. Ensure all constitutional documents (Registration Certificate, Memorandum/Rules & Regulations) are in order.
2. Maintain audited financials, activity reports, and bank statements for the past 3 years (or as required).
3. Register on the FCRA online portal maintained by the Ministry of Home Affairs (MHA) and fill out the appropriate form (FC-3 for registration or FC-3A/3B for prior permission).
4. Upload required documents (scanned copies), and pay the registration fee if applicable.
5. Await verification/inspection by the Department and decision from the MHA.
6. Once registration or permission is granted, open the designated bank account, comply with conditions and begin receiving foreign contributions lawfully.

Ongoing Compliance Obligations After FCRA Registration

Once an NGO obtains FCRA registration, the following compliances must be strictly observed:

• Maintain a single designated bank account for receiving foreign contributions; inform MHA of any change within 15 days (Form FC-6) or if more than 50% of key functionaries change.
• Maintain separate books of accounts for foreign contributions (distinct from local funds). Do not mix foreign funds with domestic funds.
• File the annual return on the FCRA portal (Form FC-4) even if no foreign contribution is received (file NIL return). Failure to file may lead to suspension/cancellation.
• Do not use foreign contributions for any purpose other than what is permitted. Transfers of funds if any, must comply with FCRA rules (for example, to another FCRA-registered organisation).
• Monitor amendments and changes to FCRA regulations (e.g., via FCRA Amendment Act, 2020/2022) to ensure continuing compliance.

Key Benefits of FCRA Registration

• Enables receipt of foreign funds legally, thereby widening the resource base of the NGO.
• Builds credibility with foreign donors and facilitates partnerships.
• Ensures regulatory compliance and lowers the risk of sanctions or freezing of funds.
• Enhances transparency and trust among stakeholders and the public.

Common Mistakes NGOs Make — and How to Avoid Them

Here are several typical pitfalls, along with tips to prevent them:

Mistake	Why it matters	How to avoid
Incomplete/Outdated documents	Submission of incorrect/missing documents leads to rejection or delays.	Make a checklist, get documents certified and ensure they are recent.
Can lead to suspension/cancellation of registration or penal action.	Even minor errors (e-mail, address, names) can cause problems in verification.	Double-check details before submission; cross-verify the offices’ bearers list.
Mixing foreign and domestic funds	Violates FCRA accounting norms; invites regulatory action.	Maintain separate ledger/accounts; bank account dedicated to foreign funds.
Ignoring changes in key functionaries/bank accounts, etc.	Using funds for an unintended purpose	Maintain donor agreement, utilise funds only for stated object, retain proof of utilisation.
Not filing the annual return/renewal late	Non-filing triggers suspension; registration validity is limited.	Calendar compliance deadlines; file Form FC-4 and renewal at least 6 months before expiry.
FCRA prohibits the misuse of funds; may be construed as diversion.	FCRA prohibits the misuse of funds, which may be construed as diversion.	Keep updated records; intimate MHA through Form FC-6 for any change.
Investing foreign funds in speculative ventures	Follow conservative investment norms, maintain fixed deposits, etc as permitted; retain audit trail.	Follow conservative investment norms, maintain fixed deposits, etc, as permitted; retain audit trail.

 Special Considerations for NGOs in Today’s Regulatory Environment

• Recent FCRA amendments have increased scrutiny of foreign funding, including restrictions on sub-granting, caps on administrative expenditure and mandatory flow through designated banks.
• Audit and transparency expectations are higher; NGOs must stay aware of compliance risks and reputational consequences if found non-compliant.
• Many banks now require FCRA-registered NGOs to maintain special compliance setups (e-KYC, special accounts) when foreign funds enter.
• Smaller NGOs must weigh cost-benefit: obtaining FCRA registration involves time, documentation, and audit cost; ensure organisational capacity for compliance before applying.

For NGOs with international donor engagement or foreign collaborations, obtaining and maintaining FCRA registration is not just a formality but a foundation for legal, transparent, compliant operations. While the procedural steps are clear, the real challenge lies in fair utilisation, accurate accounting, timely returns and continuous vigilance. Avoiding the common mistakes listed above will go a long way in preserving registration status, safeguarding the NGO’s reputation and ensuring the organisation remains mission-focused rather than compliance-overwhelmed.

If your organisation is yet to apply, or if you are reviewing your FCRA compliance status, now is the time to engage professional advice, streamline your books, and establish robust systems. Your aim should be: “Receive foreign funds but manage them as meticulously as you manage your mission.”

Suggested Checklist for NGOs Applying/Operating under FCRA

• Registration Certificate (Trust/Society/Section 8) in order.
• Audited accounts for the past 3 years.
• Board list, office-bearer KYC documents updated.
• Designated bank account opened as required.
• Application form (FC-3 or FC-3A/3B) ready with uploaded documents.
• Compliance calendar: annual return date, renewal date, and account change intimation.
• Separate ledger for foreign contributions; no mixing of funds.
• Donor grant agreement matching purpose & utilisation.
• An internal audit or periodic review system is in place.
• Investment policy for foreign funds aligned with FCRA norms.

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