What changed
RBI compiled all previous FCRA instructions into a single Master Circular to reinforce compliance. The circular reiterates that banks must insist on prior Central Government permission for entities covered under Sections 4 and 5 of FCRA, and ensure only registered associations under Section 6 receive foreign contributions through designated bank branches.
What it means for you
Banks must tighten scrutiny of foreign donation receipts to avoid penalties and regulatory action. Non-compliance with FCRA provisions, as previously flagged by the Home Ministry, can lead to serious reputational and operational risks. This circular serves as a reminder to update internal processes and train staff on FCRA obligations.
What you must do
- Verify that entities receiving foreign contributions are registered with the Ministry of Home Affairs or have prior permission, as per FCRA Sections 4, 5, and 6.
- Ensure foreign contributions are credited only through the designated bank branch specified in the entity's registration application.
- Bring the contents of this Master Circular to the notice of controlling offices and branches to ensure compliance.
- Follow the procedure outlined in the circular: insist on prior permission for entities under Sections 4 and 5, credit only to registered associations under Section 6, and note registration numbers in records.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank branches handling foreign contribution accounts, Compliance and AML teams in banks
What is the key requirement for banks under this FCRA Master Circular?
Banks must ensure that foreign contributions are accepted only from entities registered with the Ministry of Home Affairs or those with prior Central Government permission, as per FCRA Sections 4, 5, and 6.
Why did RBI issue this Master Circular?
The Home Ministry reported repeated violations by banks in handling foreign donations. RBI compiled earlier instructions into one circular to emphasize strict adherence and avoid future breaches.
Does this circular apply to all banks?
It applies to all scheduled commercial banks, excluding Regional Rural Banks (RRBs), as specified in the circular.