FCRA Bank Accounts: What NGOs Must Know in 2025
Imagine you’re managing an organisation committed to social impact, with grants, partnerships, and supporters from around the globe. You receive a foreign donation intended for a specific project. But instead of flowing smoothly into action, the money gets stuck—trapped in a web of rules, restrictions, and red flags.
That’s the reality for many NGOs navigating FCRA (Foreign Contribution Regulation Act) banking in India today. The regulations aren’t just bureaucratic hurdles; they’re critical frameworks that can either enable or paralyse your operations.
In this article, you’ll get a clear understanding of the latest FCRA bank account rules, the types of accounts allowed, and the often-overlooked banking mistakes that can invite serious compliance trouble.
The Three-Tier FCRA Account System
1. The Designated FCRA Account at SBI, NDMB
This is the sole entry point for all foreign contributions.
- Must be opened at the State Bank of India, New Delhi Main Branch (Sansad Marg).
- NGOs cannot receive foreign funds in any other account, even if it was previously designated for FCRA.
2. Another FCRA Account
This refers to accounts that were earlier used for receiving FC but are now used only for internal transfers.
- Funds must be first received in the SBI-NDMB account.
- Only then can they be transferred to these accounts for utilisation.
3. Utilisation Accounts
These are used for actual project expenses.
- Can be opened in any scheduled bank.
- Cannot receive FC directly.
- Must not be used for local (non-FCRA) funds.
Why FCRA Banking Is Not Just About Opening Accounts
Many organisations make the mistake of treating FCRA banking like ordinary fund management. But under FCRA, how you move money is just as important as where you keep it.
Improper fund movement can result in violations — even when intentions are good.
Let’s look at what not to do.
What Happens When You Mix Foreign and Local Funds?
Think of your FCRA and local bank accounts like oil and water — they should never be mixed.
Deposit Indian donations into FCRA utilisation accounts
- Deposit Indian donations into FCRA utilisation accounts
- Deposit foreign contributions into local accounts
- Transfer from a utilisation account back to the SBI-NDMB account (which is not allowed)
- Pool expenses or revenues without separating FC and local funds
This isn’t just a technical breach. It signals non-compliance and could be viewed as misutilisation of foreign funds.
The Compliance Consequences of Getting It Wrong
If the Ministry of Home Affairs (MHA) detects these errors during scrutiny or inspection, you could face:
- Freezing of FCRA and/or local bank accounts
- Suspension or cancellation of FCRA registration
- Penalties under the FCRA Act
- Even prosecution under Section 35 of the FCRA 2010
It only takes one mistaken deposit to trigger a chain of questions your team may struggle to answer.
How to Stay Compliant: What Every NGO Should Do
Managing your accounts properly isn’t just a finance function; it’s a strategic compliance practice. Here’s how you can stay aligned:
- Ensure all foreign contributions are received only in the SBI-NDMB account
- From there, transfer funds to utilisation accounts as needed
- Open separate accounts for local donations and income
- Never deposit local funds into an FCRA account (and vice versa)
- Never attempt to move funds backwards from a utilisation account to the SBI account
Conclusion:
In 2025, handling your FCRA bank accounts isn’t just about technical precision. It’s about safeguarding your mission.
Because a single violation can stall projects, lose donor trust, and attract regulatory attention.
Understanding the flow of funds is understanding your organisation’s lifeline. Let it be clear, clean, and compliant.