SBI Raises Concerns Over Proposed FCRA Asset Rules, Says ‘Clarity Required’

The State Bank of India (SBI) has sought detailed rules and clear banking procedures for handling the funds and assets of organisations whose registration under the Foreign Contribution (Regulation) Act (FCRA) is cancelled, surrendered or expires.

SBI officials, led by Chairman Challa Sreenivasulu Setty, made the submission before the Joint Parliamentary Committee (JPC) examining the Foreign Contribution (Regulation) Amendment Bill, 2026. According to reports, the bank broadly supported the objectives of the proposed amendments but flagged several operational issues that would need to be addressed through clear rules.

What concerns has SBI raised?

One of the key issues highlighted by SBI is the possible gap between the date on which an organisation's FCRA registration ceases and the date on which the bank receives an authenticated communication about the change.

The bank said transactions processed during this intervening period could subsequently be questioned. SBI therefore suggested that restrictions on an account should take effect when the bank receives authenticated information from the authorities, while transactions processed before that point should receive appropriate protection.

The bank also sought clarity on several practical questions, including:

• Whether the organisation's bank account should be frozen or continue operating under restrictions.

• Who would be authorised to operate the account after government control begins.

• Whether new funds could continue to be credited.

• How existing account balances and fixed deposits would be treated.

• How interest earned on those deposits would be handled.

Proposed government control over FCRA assets

The FCRA Amendment Bill, 2026 proposes a framework under which foreign contributions and assets acquired from such contributions could come under the control of a government-designated authority if an organisation's FCRA certificate ceases to remain valid. This could happen if registration is cancelled, surrendered or not renewed.

The proposed legislation would establish a Designated Authority responsible for the vesting, supervision, management and disposal of such foreign contributions and assets.

SBI suggested that when government control is temporary, the funds could remain in the organisation's existing bank account subject to restrictions. If the control becomes permanent, the bank said funds could be transferred on the basis of a specific order.

SBI highlights scale of FCRA-linked accounts

According to the note presented to the JPC, SBI had 25,432 accounts belonging to organisations covered by the foreign funding law at its New Delhi Main Branch as of August 31.

Of these, 10,992 accounts were described as dormant, frozen, suspended or otherwise restricted, with a combined balance of around ₹165.33 crore.

The bank also pointed out that smaller and rural organisations could face difficulties if they miss renewal deadlines. SBI said an immediate loss of control over funds could potentially disrupt ongoing programmes while the funds and assets remain under the authority's control.

Government's proposed framework

The Law Ministry has told the parliamentary panel that organisations whose assets come under the designated authority would have to provide full access to their books, records and properties.

The proposed framework also covers documents, securities, lockers, safe-deposit facilities, keys and movable assets associated with the organisation.

The bill's stated objective is to create a statutory mechanism for the management and eventual disposal of foreign contributions and assets when an organisation no longer holds an FCRA certificate.

Opposition seeks more time for scrutiny

The proposed legislation has also drawn objections from opposition members of the JPC, who have sought more time to examine its provisions and related documents.

According to The Tribune, opposition members requested that a committee meeting scheduled for October 12 be deferred and sought an extension of the period for receiving public comments to four weeks.

The government has maintained that the proposed amendments are intended to strengthen transparency and ensure proper utilisation of foreign contributions. Opposition members and some stakeholder groups have raised concerns about the potential impact of the proposed provisions on organisations receiving foreign funding.

SBI's intervention adds a practical banking dimension to the parliamentary examination, with the country's largest public-sector bank seeking clear, uniform procedures before the proposed framework is implemented.