FCRA Bank Account Opening

The Central Government, in a notice dated the 21st of December, 2017, directed all Non-Governmental Organizations (NGOs), business entities and individuals who are covered under the ambit of FCRA 2010 to open their bank accounts with any of the banks which has integrated its system with the Public Financial Management System (PMFS). It also notified that the process must be completed within a month of the publication of the notice. In this article, we look at the requirement posted by the Government for FCRA bank account opening in detail.

The Foreign Contribution Regulation Act, 2010

The Foreign Contribution Regulation Act, 2010 is a consolidating Act which was enacted with the object of regulating the acceptance and utilization of foreign contribution or hospitality by certain individuals, associations or companies. Also, it seeks to prohibit the acceptance and utilization of foreign contribution or hospitality for any activities which are detrimental to relevant matters, which includes national interests.

Apart from the above functions, the Act monitors foreign funding for NGO’s, whose valued endeavours hinges on the donations of both foreign and domestic sources.

The Initiative and its Purpose

NGOs, companies and individuals were required to open foreign contribution account in banks integrated with central PFMS to inculcate a high level of transparency and pave the way for a hassle-free reporting compliance.

Designated Banks

The following PFMS integrated banks have been designated for this purpose:

1. Abu Dhabi Commercial Bank
2. ICICI Bank
3. The Cosmos Co-operative Bank
4. Bank of Baroda
5. State Bank of India
6. South Indian Bank
7. IDBI Bank
8. Central Bank of India
9. Corporation Bank
10. Karur Vysa Bank
11. Tamilnad Mercantile Bank
12. The Catholic Syrian Bank
13. HDFC Bank
14. UCO Bank
15. IndusInd Bank
16. City Union Bank
17. Syndicate Bank
18. Allahabad Bank
19. The Jammu and Kashmir Bank Ltd.
20. Punjab National Bank
21. Allahabad UP Gramin Bank
22. DCB Bank Limited
23. Manipur State Co-op Bank
24. Vijaya Bank
25. Bombay Mercantile Co-Operative Bank Ltd
26. Yes Bank
27. Oriental Bank of Commerce
28. Dena Bank
29. Bank of Maharashtra
30. Canara Bank
31. Andhra Bank
32. Axis Bank

PFMS

The PFMS is constituted under the Controller General of Accounts in the Ministry of Finance. Its operations include:

• Laying out a financial management platform for all plan schemes.
• Integrating with core banking solutions of banks handling plan funds.
• Integrating with state treasuries.
• Monitoring the flow of funds of governmental schemes.
• Rendering information across all plan schemes or implementation agencies in the country on the subject of fund utilization.
• Enhancing public accountability through a review and decision support system.

Consequences of Non-Compliance

The registration licenses of 156 NGO’s were revoked owing to their non-compliance with this mandate. Such a revocation was also the consequence of not responding to a notice dated 20/06/2018. The notice demanded an explanation for not opening a bank account under section 17 of the FCRA, 2010 in PFMS-integrated banks.

NGOs, whose licenses have been revoked, are now required to wait for a period of one hundred and eighty days from the date of the order i.e. 6/12/2018 to apply for a fresh registration under the Foreign Contribution Regulation Act, 2010. These entities are barred from accepting foreign funds until the expiry of the suspension period.