Tuesday, June 15, 2021
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Govt grants approval to NGOs to open SBI account for receiving foreign contributions, to get letter of commitment from donor about purpose of donation

According to the law, the donor is also supposed to give a commitment letter detailing how much money is being donated, the specific purpose of the money being donated. This letter is then submitted by the NGO to the government.

On Thursday (June 3), the Union Ministry of Home Affairs informed the Delhi High Court that all NGOs, with the exception of one, have been permitted to open bank accounts with the State Bank of India in the National Capital, reported The Economic Times. It must be mentioned that all NGOs, receiving foreign donations, are required by law to have their primary bank account registered with the State Bank of India under the amended Foreign Contribution Regulation Act (FCRA), 2020.

It is pertinent to note that the NGOs are supposed to spend Rs 15 lakhs to be eligible to get any FCRA contributions. According to the law, the donor is also supposed to give a commitment letter detailing how much money is being donated, the specific purpose of the money being donated. This letter is then submitted by the NGO to the government.

The Union government emphasised that the time period for verification and application for bank accounts must be cleared within 1 week from the date of removal of all objections (if any). Accordingly, the Delhi High Court ruled, “It is the stand of the respondent no. I (GoI) that all applications under FC-6 would be cleared within one week from the date all objections, in respect, thereof, are removed by the applicant (NG0s).” Reportedly, there are over 22,000 NGOs with FCRA licences that are required to obtain prior approval from MoH for opening/transferring bank accounts to SBI’s main branch in New Delhi.

Following a nod by the Union government including MoH and the Ministry of External Affairs (MEA), the NGOs need to open the bank account in SBI, where they will receive foreign contributions. While speaking about the matter, a Home Ministry official informed, “An extension has been granted till June 30 for the NGOs to open the bank accounts. In the past two weeks, applications have been fast-tracked and approvals are given. While fresh applications are expected to come up for renewal, incomplete applications may take more time.

Provisions of FCRA Amendment Act 2020 

There has been significant fine-tuning in recent years in regulations related to foreign contributions to private non-profit entities, the most recent of which has been the FCRA Amendment Act of 2020. Under these provisions, the court officers, academics in Government institutions/Universities, people on boards of statutory bodies set up by the Government of India or State Governments will have to relinquish their positions in FCRA NGOs.

Moreover, the funds cannot be transferred to other organizations but must be spent directly by the organization involved. The NGOs will also have to restrict administrative expenses to 20% of the inflow. At the same time, primary inflow is to be through an SBI branch in New Delhi. All remittance transactions can be intimated to MHA through the PFMS on a real-time basis. Similarly, all withdrawals can be intimated to MHA on a real-time basis

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