FCRA License suspension - The why, how, and the way out

CCl- Compliance Calendar LLP







Recently, the Foreign Contribution Regulation Act license granted to several non-governmental organisations has been suspended (Oxfam, CPR). The Foreign Contribution Regulation Act, 2010 is the primary legislation governing receipt of foreign funds in India, making FCRA Licence a mandatory requirement. In this article, Compliance Calendar aims to simplify the rules of FCRA licence while also describing conditions in which the FCRA licence can be revoked and steps to renew a revoked FCRA licence.

What is the FCRA licence - Does your business need it?

  • The Foreign Contribution (Regulation) Act (FCRA) in India regulates the acceptance and utilisation of foreign contributions by individuals, associations, and organisations.

  • It was passed after the emergency era, to ensure that foreign players via international donations, do not fund illegal or antisocial activities in India.

  • The act requires that any organisation or individual seeking to receive foreign funding must obtain an FCRA licence from the Ministry of Home Affairs.

  • The licence is mandatory for not-for-profit enterprises, NGOs, voluntary organisations, societies, trusts, etc.

Requirements under the Foreign Contribution Regulation Act, of 2010

The Foreign Contribution Regulation Act requires that every person or NGO that wishes to receive foreign donations must have the following:

  • Registration under the Societies Registration Act, 1860, or as a trust or a Section 8 company under the Companies Act, 2013

  • Must be in existence for at least three years

  • Should have spent over ?15 lacs during the last three years on activities for which the registration is being taken

  • Open a bank account for receipt of the foreign funds in the State Bank of India, Delhi

  • Utilising those funds strictly for the purpose for which they have been received

  • There are other restrictions, such as disallowance on transferring the funds to another NGO, filing annual returns, limit on administrative expenses for the funds, etc.

How does the process of obtaining an FCRA license work?

  • Once an application is filed, the Ministry of Home Affairs makes an inquiry into the veracity of claims made by the applicant, including an investigation by the Intelligence Bureau.

  • The applicant should be a bona fide, real person (and not be fictitious or benami)

  • The applicant must never have been prosecuted, or convicted for indulging in activities aimed at religious conversion, communal disharmony, guilty of diversion of funds or be engaged in sedition.

  • The Ministry of Home Affairs accepts or rejects the application within 90 days.

  • In case the application is rejected, the Ministry provides reasons for the rejection.

  • Once the registration for FCRA is received, it is valid for a period of five years.

  • An application for renewal can be filed within six months of date of expiry.

Who is disallowed from receiving foreign funds?

The Act lays down certain categories of purposes and professions who are disallowed from receiving foreign funds. These are:

  • Use by candidates for election

  • Journalists

  • Newspaper, media and broadcasting companies

  • Judges

  • Government servants

  • Members of legislature

  • Political parties, and their office bearers

  • Political organisations

If an organization or individual violates any of the provisions of the FCRA or any other law in India, their FCRA license may be suspended or canceled by the government. The suspension or cancellation may be temporary or permanent, depending on the nature and severity of the violation.

Some of the reasons that may lead to the suspension of an FCRA licence in India include:

  • Non-compliance with the provisions of the FCRA or any other law in India

  • Acceptance of foreign contributions without obtaining prior approval from the Ministry of Home Affairs, such as after expiry of the FCRA registration

  • Failure to apply for renewal of FCRA registration within four months of expiry

  • Utilisation of foreign contributions for purposes other than those for which they were received

  • Failure to submit the required annual reports or audited statements to the government

  • Involvement in activities that are detrimental to the national interest or security of India

  • The organisation itself becoming defunct or inoperational for a considerable period of time

Suspension of FCRA license

If an FCRA licence is suspended, the organisation or individual will not be able to receive any foreign contributions until the suspension is lifted. The Ministry has powers to suspend registration for a period of 180 days pending inquiry and can freeze its funds. The organisation will also be required to submit a report to the government explaining the reasons for the suspension and detailing the steps taken to rectify the violations.

Renewing a revoked FCRA license - the way out

  • Determine the reason for revocation: Before applying for renewal of the FCRA licence, it is essential to determine the reason for revocation. This will help in addressing the issue effectively and prevent a recurrence.

  • Rectify the violations: After determining the reason for revocation, the organisation or individual must take corrective measures to rectify the violations that led to revocation. This may involve submitting the required reports, repaying the amount of foreign contribution received in violation of the law, or addressing any other issues that led to the revocation.

  • Submit the renewal application: Once the violations have been rectified, the organisation or individual must submit the renewal application to the Ministry of Home Affairs. The application must be accompanied by all the required documents, including audited financial statements, annual reports, and other relevant information.

  • Paying the renewal fee: Along with the renewal application, the organization or individual must also pay the renewal fee as prescribed by the Ministry of Home Affairs.

  • Await decision: After submitting the renewal application, the organization or individual must wait for the decision of the Ministry of Home Affairs. The Ministry may conduct an inspection or inquiry before deciding on the renewal of the FCRA licence.

  • Challenging the decision: An order containing the rejection of renewal of FCRA Registration can be challenged in the High Court.


It is important to note that the suspension or cancellation of an FCRA licence can have serious consequences for an organisation, as it can affect their ability to carry out their activities and receive funding from foreign sources. Therefore, it is essential to comply with the provisions of the FCRA and other laws in India to avoid any legal issues or penalties.

It is also advisable to seek legal advice and assistance for the application and renewal of your FCRA registration to ensure that all the requirements are met, and any late fee or legal notices are avoided. Compliance Calendar is revolutionising business compliances in India, with its large team of lawyers, chartered accountants, company secretaries, and compliance professionals. Reach out to us for the best advice to ensure that your FCRA registration is always on point!

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