Under the Foreign Contribution Regulation Act (FCRA), it is compulsory for NGOs in India to open a designated FCRA account in the State Bank of India (SBI), New Delhi Main Branch, to receive foreign contributions. This requirement was introduced to enhance transparency and monitoring of foreign funds received by NGOs.
Under the Foreign Contribution (Regulation) Amendment Act of 2020, organisations registered under the FCRA must maintain a dedicated FCRA Account in SBI Main Branch in New Delhi to receive foreign contributions.
This designated account is exclusively for receiving online foreign funds. Additionally, organisations can open another account with any scheduled bank for utilising these foreign contributions. This account serves as the de facto designated account for fund usage.
The details of the designated account must be provided in the FCRA registration or prior permission application. The account number will be mentioned in the letter of approval that the organisation receives.
Process of Opening an FCRA Account
- Step 1: The applicant must obtain the Account Opening Form (AOF) either in person from the nearest SBI branch, a branch of their choice, or by downloading it from the SBI website.
- Step 2: The completed form must be submitted for review and verification along with the required KYC documentation, which must include the signatories’ and the controlling person’s/beneficial owner’s KYCs.
- Step 3: The applicant must forward the completed form via mail and also send a hard copy of the AOF for opening the ‘FCRA Account’ at NDMB.
- Step 4: The branch that accepted the AOF will send an acknowledgment to the applicant
- Step 5: After reviewing the AOF and KYC documents, the SBI branch that is accepting the AOF will email the verified documents to SBI, NDMB, and this process may take upto three working days
- Step 6: SBI, NDMB will confirm receipt of the AOF and other documents to the applicant via email within 1 working day of receiving them
- Step 7: Within 3 working days of receiving the duly verified scanned copies of the complete AOF and KYC documents from the receiving branch, NDMB will notify the applicant entity of the details of the newly opened ’FCRA Account’.
- Step 8: Notifications will be sent by SMS and the registered email address.
- Step 9: The applicant may continue to maintain their existing FCRA Accounts for keeping or utilising funds.
Designated Banks for FCRA Accounts
Section 17 of the Foreign Contribution Regulation Act, 2010 mandates that foreign contributions must be received only in a designated, exclusive FC account of a bank, as specified in the FCRA registration or FCRA prior permission order. This account must be separately maintained by the association. According to the Act, it is illegal to accept donations in any account other than the FCRA Designated Bank account. The funds in this account can be used directly; there are no limitations on their use.
| The State Bank of India, New Delhi Main Branch, Sansad Marg, Delhi-110001, was recognised as the branch for opening FCRA-designated bank accounts by the Ministry of Home Affairs on 7 October 2020. |
Advantages of Opening an FCRA Account in SBI
1. Transparency
In order to guarantee that foreign contributions received by NGOs and other organisations are handled openly and in accordance with legal regulations, FCRA bank accounts are essential.
2. Compliance with FCRA Amendment Act, 2020
The FCRA Amendment Act, 2020, introduced stricter regulations on the handling of foreign contributions. The stipulation that FCRA bank accounts can only be opened at the State Bank of India (SBI) main office in New Delhi is one notable modification.
3. Competitive Interest Rates
For non-resident Indians (NRIs) wishing to invest their earnings in India, State Bank of India (SBI) is the bank of choice because it offers competitive interest rates on NRI deposits. These attractive rates offer a safe and dependable banking alternative while also assisting NRIs in optimising their savings returns.
Conclusion
Opening an FCRA account involves a straightforward process that begins with obtaining and completing the Account Opening Form (AOF) and submitting it along with the required KYC documents. For existing SBI customers, submission is made at their home branch, which then forwards the documents to the New Delhi Main Branch (NDMB). The NDMB is responsible for verifying the FCRA registration and KYC details, and once approved, the applicant is notified of their account details within three working days. This streamlined procedure ensures compliance with regulations while facilitating the secure handling of foreign contributions. For quick FCRA support contact vakilsearch. Our team can help you gain major insights for the same and provide complete process support for the same.
Frequently Asked Questions
Why is SBI often recommended for opening an FCRA account?
SBI is often recommended for opening an FCRA account because it is the designated bank by the Ministry of Home Affairs for handling foreign contributions under the FCRA. Its extensive network, government backing, and compliance with regulatory requirements make it a trusted and reliable choice for organisations.
Can an organisation choose a bank other than SBI for their FCRA account?
No, under the FCRA Amendment Act, 2020, organisations are required to open their FCRA accounts exclusively at the State Bank of India's New Delhi Main Branch (NDMB). This centralisation is mandated to streamline monitoring and ensure better control over foreign contributions, eliminating the option to choose other banks.
What are the advantages of opening an FCRA account specifically in SBI?
Opening an FCRA account in SBI offers several advantages, including a robust and secure banking infrastructure, competitive interest rates on deposits, and real-time monitoring capabilities. SBI's experience in handling government-related transactions ensures smooth compliance with FCRA regulations, minimising the risk of legal or regulatory issues for organisations.
Are there any specific requirements or procedures when opening an FCRA account in SBI?
Yes, specific requirements include obtaining and completing the Account Opening Form (AOF), providing necessary KYC documents, and ensuring FCRA registration is verified. The form must be submitted to the SBI home branch, which forwards it to the New Delhi Main Branch (NDMB) for final verification and account approval within a set timeframe.
What are the consequences of not opening an FCRA account in a designated bank like SBI?
Failing to open an FCRA account in the designated SBI branch can result in legal consequences, including penalties or revocation of FCRA registration. It is also considered an offence under the FCRA Act to receive foreign contributions in any account other than the designated FCRA account, leading to compliance issues.
How does the process of opening an FCRA account in SBI differ from other banks?
The process of opening an FCRA account in SBI differs from other banks primarily because it is the only bank authorised to handle such accounts. The centralised process involves strict verification of FCRA registration and KYC documents at the New Delhi Main Branch, ensuring compliance with specific government-mandated procedures that other banks are not equipped to handle.
