RBI has made necessary changes in NEFT and RTGS systems for transactions related to Foreign Contribution (Regulation) Act (FCRA).
NEFT and RTGS System Change: The Reserve Bank of India (RBI) has asked member banks participating in the payment system to obtain necessary details while forwarding foreign donations to State Bank of India (SBI) through the NEFT and RTGS systems. Modify your Core Banking / Middleware solutions.
RBI has made necessary changes in NEFT and RTGS systems for transactions related to Foreign Contribution (Regulation) Act (FCRA). Necessary changes have been introduced in NEFT and RTGS systems . RBI said that these instructions will be effective from March 15, 2023.
The Reserve Bank of India (RBI) on Thursday made necessary changes in the NEFT and RTGS systems regarding transactions related to the Foreign Contribution (Regulation) Act. The central bank has taken this step after the Ministry of Home Affairs asked the State Bank of India to report on a daily basis about foreign donors, including money sent from abroad.
Under the Foreign Contribution (Regulation) Act (FCRA), the foreign contribution should come into the FCRA account of SBI New Delhi main branch only. Contributions to the FCRA account from foreign banks are sent through SWIFT (Society for Worldwide Interbank Financial Telecommunications) and from Indian banks through NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement).
Contribution to be received in FCRA account
In a circular titled ‘Introduction of Foreign Contribution (Regulation) Act (FCRA) Related Transaction Codes in NEFT and RTGS System’, the foreign contribution under FCRA should be received only in “FCRA account” of State Bank. Contributions to the FCRA account are received directly from foreign banks through SWIFT and from Indian intermediary banks through NEFT and RTGS systems.
RBI said that in terms of extant requirements of the Ministry of Home Affairs (MHA), all details including name, address, country of origin of the donor, amount, currency and purpose of remittance are required to be entered in such transactions. SBI has to give information about this to the Ministry of Home Affairs on a daily basis.
Rules related to FCRA made strict
RBI has asked banks to make necessary changes to capture requisite details while sending foreign donations to SBI through NEFT and RTGS systems. Since the Narendra Modi-led government came to power in 2014, the rules related to FCRA have been tightened. Under this, FCRA registrations of about 2,000 non-governmental organizations (NGOs) have also been canceled for violating various provisions of the law.
