Key Amendments Proposed to the Foreign Contribution (Regulation) Act, 2010
The Foreign Contribution (Regulation) Amendment Bill, 2026 (“FCRA Bill”) proposes significant changes to the Foreign Contribution (Regulation) Act, 2010 (“FCRA”). The FCRA Bill is presently before the Lok Sabha. Set out below are the key amendments that the FCRA Bill proposes to make to the FCRA.
1. Vesting of foreign contribution and assets in a Designated Authority
The FCRA Bill proposes a structural change by omitting Section 15 of the FCRA and introducing a new Chapter IIIA in its place. Section 15, in its existing form, provides for the vesting of foreign contribution and assets created out of foreign contribution in a prescribed authority, but does not lay down a structured framework for their supervision, management or disposal. It is pertinent to note that, no specific authority had been then notified under this provision, nor had any mechanism been prescribed for the vesting and disposal of assets.
According to the Statement of Objects and Reasons accompanying the FCRA Bill, this gap coupled with the multiplicity of investigations, inconsistency in penalties, the absence of timelines for utilisation, the lack of an express provision for cessation of registration and the ambiguity around treatment of assets during suspension has led to administrative uncertainty and implementation challenges.
The proposed new Chapter IIIA, seeks to address these concerns by putting in place a comprehensive legal framework for the management, supervision and disposal of foreign contributions and assets in the “Designated Authority”, in cases where an organisation’s registration is cancelled, surrendered or otherwise ceases to exist.
Role of the Designated Authority
The expression “Designated Authority” has been defined in FCRA Bill as such officer or authority as may be notified by the Central Government.
A Designated Authority, to be notified by the Central Government, will take provisional charge of the foreign contribution and assets created out of foreign contribution. Its key powers and responsibilities include:
- Custody and oversight: Supervising, managing, safeguarding, preserving and maintaining the vested assets, either directly or through an Administrator (i.e. an officer or authority as may be notified by the Central Government).
- Operational continuity: Where it is considered necessary or expedient in the public interest, undertaking the management of the activities of the organisation and utilising the foreign contribution for managing such assets and activities.
- Restoration: Where, within the prescribed period, a fresh certificate is granted under Section 12 of the FCRA, or the certificate is renewed under Section 16 of the FCRA or restored by revision under Section 32 of the FCRA, returning the unutilised foreign contribution and the provisionally vested assets, subject to prescribed conditions.
Permanent vesting
If the registration is not granted afresh, renewed or restored within the prescribed period, the foreign contribution and assets created out of it stand permanently vested in the Designated Authority. The Designated Authority must apply such foreign contribution and assets for public purposes, and may, by order:
- transfer the assets to a Ministry, Department, authority or agency of the Central or State Government, or to any local authority, in the prescribed manner; or
- dispose of the assets through sale or any other appropriate process, with the sale proceeds and any unutilised foreign contribution being credited to the Consolidated Fund of India.
2. Restriction on dealing with assets during suspension of registration
Under the existing Section 13(2) of the FCRA, a person whose certificate has been suspended may utilise the foreign contribution in their custody only with the prior approval of the Central Government. However, FCRA does not contain any express restriction on dealing with the assets (such as immovable property) created out of foreign contribution during the period of suspension. This silence has, over time, raised concerns regarding the alienation or encumbrance of such assets pending resolution of the regulatory issue.
The FCRA Bill seeks to plug this gap by inserting a new clause (c) in Section 13(2). The amended provision will require a person whose certificate has been suspended not to alienate, encumber or otherwise deal with any asset created out of the foreign contribution, except with the prior approval of the Central Government.
The proposed amendment is intended to remove interpretational uncertainty and to prevent the diversion of FCRA-funded assets while the regulatory status of the organisation is in question.
3. Timelines for receipt and utilisation of foreign contribution
The current FCRA framework does not prescribe an outer limit for the receipt and utilisation of foreign contribution received under prior permission. This has historically led to “fund parking”, where foreign contribution remains unspent for extended periods, increasing the risk of diversion or financial mismanagement.
The Ministry of Home Affairs had, by an administrative notification dated 7 April 2025, sought to introduce a structured timeline:
- Receipt period: a three-year window for receipt of foreign contribution from the date of approval;
- Utilisation period: a four-year window for full utilisation of such foreign contribution; and
- Extensions: permitted only in exceptional circumstances and on a limited basis.
The FCRA Bill now seeks to give this position statutory footing by inserting Section 12(7). The new sub-section provides that prior permission granted shall be valid for a specific purpose or specific amount of foreign contribution proposed to be received, and that such foreign contribution shall be received and utilised within such period as may be prescribed.
4. Expanded definition and liability of “key functionaries”
The FCRA Bill introduces the term “key functionary” through a new clause (ja) in Section 2(1). The expression is defined inclusively and covers individuals across various organisational forms, as follows:
- Companies: a Director;
- Firms: a partner;
- Trusts: a trustee;
- Hindu undivided families: the Karta;
- Societies, trade unions and associations of individuals: an office bearer, a member of the governing body, the managing committee or any other controlling authority; and
- Catch-all: any other officer or person, by whatever name called, who has control over, or responsibility for the management or affairs of, such person.
This classification is reinforced by consequential amendments for instance, Section 12(4)(e) is amended to substitute the words “directors or office bearers” with “key functionaries”, and Section 12A is realigned to reflect the new terminology.
Personal accountability under the substituted Section 39
The FCRA Bill substitutes Section 39 to restructure the framework on offences committed by organisations, focusing on the liability of key functionaries. The substituted provision contemplates two limbs as follows:
- Primary liability (Section 39(1)): Where an offence under the FCRA is committed by a person other than an individual, every key functionary who, at the time of the offence, was in charge of and responsible to such person for the conduct of its business is deemed to be guilty along with the person itself. Such a key functionary may avoid liability only by proving that the offence was committed without their knowledge, or that they had exercised all due diligence to prevent its commission.
- Extended liability (Section 39(2)): Any key functionary with whose consent or connivance, or by reason of whose neglect, the offence has been committed is also deemed to be guilty, irrespective of whether such functionary was in charge of the day-to-day business.
The thrust of the change is to extend personal accountability beyond the existing class of “directors or office bearers” and to map liability onto whoever, in substance, controls or runs the organisation.
5. Rationalisation of penalties under Section 35
The FCRA Bill substitutes Section 35 with the objective to rationalise the penalty structure. The substituted provision is as under:
- Expansion of the scope of the offence to cover not only the acceptance of foreign contribution in contravention of the FCRA, but also its utilisation, as well as assistance to others in such acceptance or utilisation;
- Reduction of the maximum term of imprisonment from five years to one year; and
- Retention of the alternative or cumulative penalty of fine.
Conclusion:
The FCRA Bill signals a fundamental change in the government’s approach to FCRA-registered organisations, extending its reach to their assets immediately upon cancellation, surrender, or cessation of registration. While framed as a measure to strengthen accountability and continue the tightening of the FCRA regime, the proposed amendments could impose severe consequences on genuine organisations that falter due to procedural delays or inadvertent lapses rather than deliberate violations. For stakeholders, the message is unmistakable, that foreign donors must intensify compliance checks on Indian partners; organisations must treat registration renewal as a critical priority; foreign contributions must be tracked with precision to separate them from other assets; and governance frameworks must be strengthened so that key functionaries fully understand their heightened responsibilities and liabilities. In essence, the FCRA Bill demands a culture of meticulous compliance and proactive governance, without which even well-intentioned organisations may face disproportionate risks.
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