What changed
Previously, corporate donations exceeding USD 5,000 per annum required RBI approval, and setting up chairs in foreign educational institutions needed prior clearance. Now, AD Category-I banks can directly handle remittances for three specified purposes—creating chairs, donating to educational funds, or contributing to technical bodies—up to a limit of 1% of the company's foreign exchange earnings over the last three years or USD 5 million, whichever is lower. The old USD 5,000 threshold for other donations remains unchanged.
What it means for you
This liberalisation reduces the compliance burden for corporates with proven forex earnings, allowing faster processing of donations for education and technical fields. Banks must verify the remitter's forex earnings over three years and ensure the purpose fits the specified list. For non-specified purposes, the old approval route via RBI continues.
What you must do
- Update internal procedures to process corporate donation remittances up to 1% of forex earnings or USD 5 million (whichever is lower) for specified purposes without RBI approval.
- Verify the remitter's foreign exchange earnings for the previous three financial years before processing any donation under this facility.
- Ensure the donation purpose matches one of the three specified categories: chairs in reputed educational institutes, funds promoted by educational institutes, or technical institutions/bodies in the donor's field.
- Continue to route applications for non-specified purposes to RBI Central Office with required details (forex earnings, company background, purpose, benefits).
- Maintain the existing USD 5,000 per remitter per annum limit for other donations and inform customers of the new liberalised route.
Who it affects
AD Category-I banks, Indian corporates with foreign exchange earnings, Educational institutions and technical bodies receiving donations
What is the new limit for corporate donation remittances under this circular?
The limit is the lower of 1% of the company's foreign exchange earnings during the previous three financial years or USD 5 million per annum.
Do we still need RBI approval for donations above USD 5,000?
Only for donations that do not fall under the three specified purposes (chairs, educational funds, technical bodies). For those specified purposes, AD banks can process up to the new limit without RBI approval.
What documentation must we collect from the corporate for this facility?
You need to verify the company's foreign exchange earnings for the last three years and ensure the donation purpose matches one of the specified categories. For non-specified purposes, additional details like company background and likely benefits are required for RBI submission.