May 25, 20212 min read

Open FCRA account of NGOs within 10 days of receiving Centre approval: Delhi High Court to SBI

The Delhi High Court on Thursday (May 20) directed the State Bank of India (SBI) to ensure that applications for opening the Foreign Contribution (Regulation) Act (FCRA) account by NGOs who seek to receive foreign funds are processed at the earliest and that their bank accounts are made operational within 10 days of receiving approval from Central government.

The Bench of Justice Rekha Palli ordered this in a clutch of petitions filed by NGOs and the order came days after the High Court asked the Ministry of Home Affairs to consider extending the deadline (April 1, 2021) for opening the Foreign Contribution (Regulation) Act (FCRA) account by NGOs who seek to receive foreign funds.

Submissions of the Petitioners

The Petitioners submitted that they continued to be prevented from receiving foreign contributions owing to certain processing delays attributable to the State Bank of India (SBI). It was submitted that:-

Despite the timely submission of FC-6 certificates with the State Bank of India (SBI), the new designated accounts of the petitioners with the SBI New Delhi Main Branch for receiving foreign contributions, have not been made operational.

This has created a difficult situation for the petitioners who are completely unable to receive any foreign contributions and use that money for the sustenance of the organization and their social outreach programs.

Court's order

In these circumstances, the Court disposed of the petitions by directing that in the future:

"The State Bank of India (SBI) shall ensure that all the applications of the petitioners herein, as well as those of a like nature submitted by other similarly situated applicants, shall be processed at the earliest and the relevant bank accounts sought to be set up for receiving foreign contributions, shall be made operational within ten days of receipt of the FC6 certificate from the concerned applicant."

Lastly, the petitioners were granted liberty to move an application for revival of these petitions in case the respondents fail to adhere to the schedule indicated hereinabove.

Background

The matter pertained to Section 17 of the Foreign Contribution Regulation Act, 2010 [w.e.f. September 2020] read with a public notice issued by the Ministry of Home Affairs in October 2020 which made it mandatory for NGOs that receive foreign contributions to open an FCRA account in the State Bank of India, New Delhi Main Branch.

NGOs had submitted that they were facing tremendous difficulty both in the opening of the FCRA account, as also in the subsequent approval which is to be obtained from the MHA, as, without the approval of the MHA, no foreign contributions can be received by them.

A prayer was also made for extending the deadline of 1st April, 2021 permitting receiving of foreign contributions by a period of six months, and for directing the MHA to grant FC6C certificates to the Petitioners in an expeditious manner.

Notably, The Ministry of Home Affairs on Wednesday extended time for FCRA account holders until June 30, 2021, to open their "FCRA Account" in the New Delhi Main Branch (NDMB) of the State Bank of India.