There are very strict rules regarding using Foreign Funds under FCRA (Foreign Contribution Regulation Act). Also, FCRA department has already cancelled licenses of many organization on the basis of non-compliance of rules and provisions of FCRA.
As per sec 17 of this Act, every NGO who has been registered under FCRA, has to open a separate Bank Account for receiving and utilizing foreign funds. Let us look at some of the 5 points you should keep in mind while operating FCRA Bank Account.
(1) Do not mix FC & NonFC Funds
Do not receive any funds other than foreign funds to your FCRA Bank Account. You can receive funds in Indian Rupees if it comes from foreign source. Utmost care should be taken while depositing cheques or giving bank account numbers to donor.
(2) Interest linking of FDs
You need to instruct very clearly to Bank regarding linking of FDs with your Bank Account. Care should be taken that only FDs from FC funds link with your FCRA bank account so as to receive interest in that bank account only.
(3) Online Donation
If you are accepting Donation online through your website or crowd funding website, your payment gateway should be capable of transferring FC money to FC Bank Account and NonFC money to NonFC Bank Account.
(4) Time Barred Cheques
Your accounting system should be such that at the every month, all the cheques which are time barred will be cancelled and reversed in the books of account automatically. Otherwise, what happen, in FCRA return expenses were reported, while your balance in FC bank accounts not reduced that much.
(5) Sub – FC (Utilization) Bank Account
If you have open a Sub-FC Bank Account for project utilization, do not accept funds directly in that bank account. You have to accept FC funds in Main FC account always and then transfer to Sub-FC Bank Account.