SBI seeks clarity on handling NGO funds under proposed FCRA changes

New Delhi: The State Bank of India (SBI) is learnt to have supported the objectives of the proposed amendments to the Foreign Contribution (Regulation) Act while seeking clear rules on how banks should handle an organisation's accounts and deposits when its permission to receive foreign donations ends.

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In a presentation to the parliamentary committee examining the Foreign Contribution (Regulation) Amendment Bill, 2026 on Tuesday, a team of top SBI officials, led by its Chairman Challa Sreenivasulu Setty, said the bill provides for government control of foreign contributions and assets in such cases, but leaves the detailed banking procedure to be prescribed in rules, sources said.

The bank sought clarity on whether an account should be frozen or continue to operate once control passes to a government-appointed authority.

It also asked who would be allowed to operate the account, whether incoming payments could still be credited and how existing balances, fixed deposits and interest would be treated.

The bill proposes that foreign contributions and assets bought with them temporarily pass to a government-designated authority when an organisation's registration is cancelled, surrendered or ceases. They could end up with the authority permanently if the organisation does not regain registration within a prescribed period.

The sources said that during Tuesday's meeting of the Joint Committee of the Parliament examining the bill, the SBI flagged a potential gap between the date a registration ceases and the date a bank is informed.

Transactions processed during that interval could be "questioned", the bank said.

It suggested that restrictions take effect for the bank when it receives an authenticated communication, and sought protection for transactions processed before then.

It proposed keeping funds in the existing account under restrictions while the authority's control is temporary. If that control becomes permanent, the money could be transferred on a specific order, SBI said.

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As of August 31, SBI had 25,432 accounts for organisations covered by the foreign funding law at its New Delhi main branch.

Of these, 10,992 were dormant, frozen, suspended or otherwise restricted, with a combined balance of Rs 165.33 crore, according to the note presented to the JPC members.

The bank also said smaller or rural associations that miss a registration renewal deadline could lose control of their funds immediately upon expiry.

Ongoing programmes could be affected while funds and assets remain under the authority's control, it said.

The SBI said it supports a clear legal framework for managing foreign contributions when an organisation's registration ends.

It called for detailed rules, common procedures for banks and prompt updates on registration status before the new provisions take effect.

The bill, introduced in Lok Sabha in March, is before a joint parliamentary committee.

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