What changed
The Foreign Contribution (Regulation) Act, 2010, effective from May 1, 2011, replaces the 1976 Act. Banks must now ensure that recipients of foreign contributions maintain a single designated account and report remittances to specified authorities. The new Act also prohibits mixing foreign contributions with other funds in the same account.
What it means for you
Banks must update their KYC and monitoring processes to identify and handle FCRA accounts correctly. Non-compliance could lead to regulatory action, as banks are obligated to report foreign remittance details. Lenders should train staff on the new rules to avoid penalties and ensure smooth operations for clients receiving foreign funds.
What you must do
- Review and update internal policies to align with FCRA 2010 and Rules, 2011.
- Ensure customers with FCRA registration maintain a single designated account for foreign contributions only.
- Train branch staff on reporting foreign remittance details to specified authorities as per the Act.
- Advise customers to obtain prior permission or registration from the Central Government before accepting foreign contributions.
- Consult legal experts for any doubts on compliance, as the circular is only a guide.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Bank compliance and AML departments, Customers receiving foreign contributions (e.g., NGOs, charitable organizations)
What is the key change for banks under FCRA 2010?
Banks must ensure that recipients of foreign contributions use a single designated account, and report foreign remittance details to the specified authority. The new Act replaces the 1976 version.
Are Regional Rural Banks covered by these guidelines?
No, the guidelines apply to all scheduled commercial banks excluding Regional Rural Banks (RRBs).
What should a bank do if a customer is not registered under FCRA?
Advise the customer to obtain prior permission from the Central Government before accepting foreign contributions, as per the Act.