Implications of FCRA Amendment Bill 2026

The Foreign Contribution Regulation Amendment Bill, 2026 proposes firm directives, stringent compliance, enlarged government control over foreign funds and assets, and introduces mechanisms for more detailed oversight, FCRA asset management, and enforcement!

Link to the proposed Bill:

https://prsindia.org/files/bills_acts/bills_parliament/2026/Foreign_Contribution_Bill_2026_Text.pdf

General impression

On reading the proposed Bill ones first reaction would be that the alphabet ‘R’ for ‘Regulation’ in FCRA should be replaced with a ‘C’ for ‘Control’ and renaming the statute as ‘Foreign Contribution Control Act.’ This would more aptly reflect the letter and spirit of the law as amended in the year 2020 and now further sought to be amended this year in 2026.

The premise that a statute should ‘regulate’ rather than ‘control’ is a fundamental principle of law. While the State has the power to ‘regulate’ activities, especially in the interest of the general public, it must avoid imposing unreasonable restrictions that amount to the prohibition or total control or takeover of a right. Having said that, in a significant 2022 judgment, the Supreme Court of India has ruled that receiving foreign contributions is not a fundamental right, but a regulated activity that can be restricted to protect national sovereignty.

Current statistics

As per data on the Ministry of Home Affairs (FCRA) portal, about 15,000 organisations are currently registered under FCRA, while the registration of close to 22,000 organizations has been cancelled and the registration of about 15,000 more organizations is deemed as expired.

Link to the data: https://fcraonline.nic.in/fc_dashboard.aspx

Key changes proposed in the Bill

‘Designated Authority’ for FCRA Assets

A key proposed change allows the Central Government (Ministry of Home Affairs) to appoint a “Designated Authority” to take over, manage, or dispose the assets created out of foreign funds by Non-Governmental Organizations (NGOs) whose FCRA registration has been suspended, cancelled, or not renewed.

This amendment should not surprise anyone. This amendment simply addresses a previously existing legal gap. Under Section 14A and Section 15 of FCRA 2010, as amended in the year 2020, if the FCRA registration is cancelled or even if the FCRA registration is ‘voluntarily surrendered’ (including by a one hundred per cent compliant and good organization) “shall vest in such authority as may be prescribed.” This proverbial ‘sword of Damocles’ has been hanging over the heads of FCRA registered NGOs since the past five year. The proposed amendment will now enable the “Designated Authority” to give effect to the provisions of Section 14A and 15.

“Designated Authority” shall mean “such officer or authority as may be notified by the Central Government for the purposes of this Act.”

Powers of the ‘Designated Authority’

The Designated Authority and the Administrator, for the purposes of discharging their functions under FCRA, shall:

• Have all the powers of a Civil Court under the Code of Civil Procedure, 1908, while trying a suit, in respect of summoning and enforcing the attendance of any person, examining them on oath, requiring the discovery and production of documents, receiving evidence on affidavits, issuing commissions and such other matters as may be prescribed;
• Be deemed to be a Public Servant within the meaning of clause (28) of section 2 of the Bharatiya Nyaya Sanhita, 2023 (formerly known as the Indian Penal Code.)

All officers of the Central Government, State Governments, Union territory Administrations, Local Authorities, Public Financial Institutions, Banks and such other Authorities or Agencies as may be specified by the Central Government shall extend such assistance to the Designated Authority as may be required for the discharge of its duties.

Restrictions during period of suspension

During the period when FCRA registration of the NGO is suspended (The 2020 amendment extended the period of suspension of FCRA registration from ninety to one hundred and eighty days) the organization shall “not alienate, encumber or otherwise deal with any asset created out of the foreign contribution, except with the prior approval of the Central Government.”

When Registration is cancelled or not renewed

The FCRA funds of NGOs whose FCRA registration has been cancelled, or not renewed can (once the Bill is passed as Act) be transferred by the “Designated Authority” or in the case of FCRA assets (e.g. land, building, equipment etc.) can be sold and the proceeds transferred to the ‘Consolidated Fund of India.’  The ‘Consolidated Fund of India’ is a primary account for government revenues and expenditures.

The Bill specifically proposes that if the NGO fails to obtain a fresh certificate or fails to get its certificate renewed or restored within the specified period, the foreign contribution and the assets created out of foreign contribution shall thereupon stand permanently vested in the ‘Designated Authority.’

The Bill specifically proposes that the ‘Designated Authority’ shall apply the foreign contribution and the assets permanently vested in it for public purposes and may, by order:

(a) Transfer such assets to any Ministry, Department, Authority or Agency of the Central Government or of a State Government or any local authority, in such manner as may be prescribed; or

(b) Dispose of such assets through sale or any other appropriate process, in such manner as may be prescribed and credit the sale proceeds together with any unutilised foreign contribution to the Consolidated Fund of India.

On winding up the organisation

The Bill proposes that notwithstanding anything contained in any other law for the time being in force, where any organisation that was permitted to accept foreign contribution under FCRA ceases to exist or is rendered inoperative or defunct:

(a) The last Key Functionaries shall inform the Central Government of such cessation or status of being inoperative or defunct, in such form and manner and within such period as may be prescribed; and

(b) The foreign contribution received by such organization and the assets created out of foreign contribution shall stand permanently vested in the ‘Designated Authority.’

Assets created partly with foreign funds

The Bill proposes that the NGOs asset, if created or acquired partly from foreign contribution and partly from other sources shall vest wholly in the ‘Designated Authority,’ in case FCRA registration is cancelled or even voluntarily surrendered.

However, it is provided under the proposed Bill that the NGO may make an application to the ‘Designated Authority’ for return of any distinct or ascertainable portion of the asset created or acquired from other sources and the ‘Designated Authority,’ on being satisfied, shall by an order, return such portion of the asset to the applicant in such manner as may be prescribed.

Compliance and cooperation

All Key Functionaries of NGOS whose foreign contribution or assets are vested in the Designated Authority shall:

(a) Afford to the Designated Authority or to any person authorised by it, full and unhindered access to its books of account, records (including electronic records), premises and properties and allow inspection, inventory and valuation thereof;

(b) Produce or deliver all books, accounts, documents, securities, keys and movable assets and hand over possession or control of bank accounts, lockers and safe deposits, as may be required by the Designated authority;

(c) Not alienate, encumber, part with possession of, or conceal, remove or otherwise deal with any foreign contribution or asset created out of such contribution, except with the prior approval of the Designated authority; 

(d) Keep such foreign contribution and assets intact and in the same condition, and shall carry on its activities under the supervision of, and subject to such terms and conditions as may be specified by the Designated authority;

(e) Furnish correct and complete information, returns and declarations and cause an authorized representative to appear when called for; and

(f) Provide such assistance and comply with such further directions as may be issued by the Designated authority or the Central Government, as may be required for the purposes of carrying out the provisions of this Act.

Defining Key Functionary

Under FCRA two terms are used – ‘Chief Functionary’ and ‘Key Functionary.’ The term ‘Key Functionary’ is not clearly defined.

Under the proposed amendment “Key Functionary” shall include the following:

• The Director of a Company (including a Section 8 Company);
• A Partner in a Firm;
• A Trustee of a Trust;
• Karta of a Hindu undivided family;
• An office bearer, member of the governing body, managing committee or other controlling authority of a society, trust, trade union or association of individuals; and
• Any other officer or person, by whatever name called, who has control over, or responsibility for the management or affairs of such organisation.

This amendment not only casts the net wide to cover “any other officer or person, by whatever name called, who has control over, or responsibility for the management or affairs of a charitable trust, society or a section 8 company, it also draws within it’s scope Partners of a Partnership Firm, Karta of a HUF or Director of a for-profit company. The inference is, even if such for-profit entities receive ‘foreign contribution’ for a “definite cultural, educational, economic, religious or social program” FCRA 2010 could be made applicable and such individuals would be the “key functionaries” that can be held liable.

Prior Approval for Investigations

The Bill mandates that any law enforcement agency or State Government must seek the prior approval of the Central Government before initiating investigation into FCRA-related complaints. 

Timelines and Automatic Cessation

The Bill proposes fixed timelines for receipt and utilisation of foreign funds under the ‘Prior Permission’ category (where NGOs who are not registered under FCRA, apply for prior permission to receive a fixed sum of foreign funds from one specific donor.)

The Bill also proposes automatic cessation of registration upon expiry of the FCRA certificate or non-renewal of FCRA registration.

Also, no organisation whose certificate has ceased to exist shall either receive or utilise the foreign contribution unless the certificate is renewed.

Reduced Imprisonment

The Bill proposes reducing the maximum imprisonment for FCRA offences from five years to one year, alongside rationalized penalties.

Noshir H. Dadrawala