Master Circular - Foreign Contribution ( Regulation ) Act, 1976 - Obligations of Banks in Regulating Receipt of Foreign Contributions by Associations / Organizations in India

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.... Yours  faithfully, (Vinay Baijal) Chief General Manager Click here to download Master Circular ============= Document 1 भारतीय रिज़र्व बैंक RESERVE BANK OF INDIA www.rbi.org.in RBI/2009-2010/72 Ref No. DBOD. AML. BC. No.1 / 14.08.001 / 2009 - 10 July 01, 2009 The Chairman & CEOs of all Scheduled Commercial Banks (excluding RRBs) and all Financial Institutions Dear Sir, Master Circular - Foreign Contribution ( Regulation ) Act, 1976 - Obligations of Banks in Regulating Receipt of Foreign Contributions by Associations / Organizations in India Please refer to our Master Circular DBOD.AML.BC No. 8 / 14.08.001 / 2008 - 09 dated July 01, 2008 consolidating instructions/guidelines issued to banks till June 30, 2008 on Foreign Contribution ( Regulation ) Act, 1976 - Obligations of Banks in Regulating Receipt of Foreign Contributions by Associations / Organizations in India. This Master Circular is a consolidation of the instructions issued in this regard up to June 30, 2009. 2. The Master Circular has been placed on RBI website: (http://www.rbi.org.in ) ....

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....bution ( Regulation ) Act, 1976 - Obligations of Banks in Regulating Receipt of Foreign Contributions by Associations / Organizations in India. A list of circulars/ instructions which have been consolidated in this master circular, is given in Annex - I. 4 Application These instructions are applicable to all the scheduled commercial banks (excluding RRBs) and all Financial Institutions. Structure 1. Introduction 1.1 Conditions for accepting foreign donations by banks 2. Guidelines 2.1 General 2.2 Procedure for receiving foreign contributions 2.3 Foreign Contribution 2.4 Foreign Source 2.5 Periodical Reporting to Central Government 2.6 Common Irregularities observed 3. Annex 4. Format of Half Yearly Statement 1. Introduction 1.1 Conditions for accepting foreign donations by banks Banks are required to strictly adhere to the provisions of FCRA, 1976 while dealing with receipt of foreign contributions. Section 4 of the Act ibid stipulates that no foreign contribution shall be accepted by any candidate for election, correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper, judges, government s....

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....sed to bring the contents of the circular to the notice of all their branches/ controlling offices with instructions to ensure strict adherence to the instructions issued. Banks should also evolve a system of monitoring compliance by the branches through the respective controlling offices and fixing of accountability for lapses observed in this regard. 2.2 Procedure for receiving foreign contributions Banks have been advised by Reserve Bank several times to scrupulously adhere to the provisions of FCRA, 1976. A list of circulars issued earlier in this regard is annexed. It is reiterated that banks should ensure that they strictly comply with the provisions of FCRA, 1976 and the procedure as indicated below is followed while receiving foreign contributions. Accordingly: (a) Banks should insist on prior permission of Central Government before accepting a foreign contribution in the accounts of entities covered under Section 4 and 5 of the FCRA, 1976; (b) They should afford credit of the proceeds of cheques/drafts representing foreign contribution only if the association etc., as indicated in Section 6 of the Act are registered with the Ministry of Home Affairs, Government....

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....g foreign nationals of Indian origin or if such funds have been transferred by the first recipient of foreign contribution 8 to other organisation/s within the country would be considered as 'foreign contribution' under the FCRA, 1976. Further, interest earned from deposits made out of foreign contribution would also to be treated as 'foreign contribution' under the Act. Non-depositing of the above types of 'foreign contribution' in the designated bank account of an organisation would constitute a violation of the Act and the association would be liable for penal action under the Act. Therefore, banks should not ordinarily refuse to credit the legitimate proceeds of any 'foreign contribution' to the designated bank account of an association, which has either obtained prior permission or registration under FCRA from the Ministry of Home Affairs. 2.4 Foreign Source Organisations/associations in India can accept contributions from a "Foreign Source" only if they are registered with the Ministry of Home Affairs or only after obtaining prior permission from the above Ministry. The "Foreign Source" for the purpose of the aforesaid Act has been defined in Section 2(e) of the A....