Existing FCRA-registered associations have been given one year to indicate the purposes and geographical areas they wish to retain in their registration. Any subsequent expansion in scope will require fresh approval.
The notification also broadens the definition of “key functionary”, restricts organisations with foreign nationals in key management positions from ordinarily receiving registration or prior permission, introduces a minimum utilisation requirement for renewal and cancellation decisions, tightens conditions for release of subsequent instalments of foreign funds, and mandates more extensive disclosures in annual returns, including activity reports, social media account details and information on ultimate donors.
The second notification revises compounding penalties for violations such as excess administrative spending, speculative investments, diversion of foreign funds and use of foreign contributions outside approved purposes or areas.
What’s new compared to the 2011 rules?
The changes mark a shift from a relatively broad, programme-based framework to a far more prescriptive regulatory regime.
Under the 2011 Rules, organisations broadly identified themselves as undertaking religious, cultural, educational, economic or social activities and described their programmes. The new rules require them to choose from a government-notified list of approved activities, with registrations tied to those specific purposes.
A second major change is geographical restriction. While organisations earlier disclosed their areas of operation, registration itself was not linked to specific states or Union Territories. The new framework makes geography part of the licence.
The 2011 rules referred mostly to “Members of the Executive Committee or Governing Council” and “Chief Functionary”, without defining “key functionary” which have now been specified as directors of companies, partners in firms, trustees of trusts, the Karta of a Hindu Undivided Family, office bearers and members of governing bodies, and “any other officer or person… who has control over, or responsibility for the management or affairs” of the association.
The rules also explicitly exclude “proselytisation” from permitted religious activities, define “key functionary” more broadly, place new restrictions on organisations with foreign nationals in leadership positions, introduce a minimum utilisation threshold for foreign funds, and tighten scrutiny of organisations receiving funds through prior permission.
Taken together, the changes significantly increase government oversight over how, where and for what purposes foreign contributions can be used.
Why is proselytisation mentioned specifically?
One of the most notable features of the new Schedule is the repeated use of the phrase “excluding proselytisation” in relation to religious activities.
While the 2011 rules recognised a range of religious activities, they did not expressly refer to proselytisation. The new framework allows faith-based activities such as religious education, theological study, preservation of religious traditions and religious gatherings, but explicitly excludes conversion-oriented work.
The Constitutional backdrop is significant. Article 25 guarantees the right to profess, practise and propagate religion, but the Supreme Court in Rev Stainislaus vs State of Madhya Pradesh (1977) held that the right to propagate religion does not include a right to convert another person.
By expressly excluding proselytisation, the Centre is signalling that foreign contributions can support religious and faith-based activities, but not conversion-oriented work.
The move dovetails into the ideological framework that shapes the Sangh Parivar and the BJP. It has been a long-standing concern within the Sangh Parivar that foreign-funded organisations are involved in religious conversions.
Since coming to power, the Narendra Modi government has faced allegations of targeting Christian organisations under the FCRA regime over suspicions of conversion. Several Christian institutions, including Missionaries of Charity, Compassion International, World Vision India, Evangelical Fellowship of India and Church of North India-linked entities, have faced FCRA action. While the government has maintained that these actions were based on specific violations of FCRA provisions, many followed campaigns by Sangh-affiliated groups alleging involvement in religious conversion.
In December 2021, the Union Home Ministry declined to renew the FCRA registration of the Missionaries of Charity, founded by Mother Teresa, citing adverse inputs and non-fulfilment of eligibility conditions. The decision came amid long-running allegations by Hindu nationalist groups that some institutions run by the congregation were involved in religious conversions.
Why were these amendments needed?
The government’s stated rationale is to strengthen oversight of foreign funding, plug compliance gaps and improve monitoring of how foreign contributions are used.
Officials argue that the existing framework did not adequately track whether funds were being used for approved purposes or in approved areas of operation. The new system seeks to address this through purpose-specific registration, geographical restrictions, enhanced disclosures and tighter reporting requirements.
MHA sources have also pointed to the need for stronger mechanisms to manage assets created through foreign contributions when an organisation’s FCRA registration lapses, is cancelled or is surrendered.
Government advisories in recent years have repeatedly flagged concerns over misuse of foreign funding, including its alleged use in activities beyond approved purposes and in cases involving religious conversion.
The requirement that NGOs submit detailed activity reports, disclose social media accounts and identify ultimate donors behind donor-advised funds or intermediary funding vehicles reflects a push to close information gaps that made it difficult to track influence networks and money trails.
Significance of the second notification on penalties
The second notification, issued under Section 41(1) of the FCRA, revises compounding penalties for several violations relating to the receipt and utilisation of foreign contributions.
Among the key changes:
- Administrative expense breach: Spending foreign contribution beyond the statutory 20% cap on administrative expenses will attract a penalty of Rs 1 lakh or 5% of the excess expenditure, whichever is higher.
- Speculative investments: Utilising foreign contribution in speculative activities such as stock market investment will attract a penalty of Rs 1 lakh or 30% of the amount invested, whichever is higher. Any returns earned will also be recovered.
- Diversion of funds: Using foreign contribution for purposes other than those for which it was received will attract a penalty of Rs 1 lakh or 30% of the amount involved, whichever is higher.
- Wrong purpose or geography: Accepting or utilising foreign contribution for purposes or in States and Union Territories not covered by registration will invite similar penalties.
The revised penalty framework raises the cost of non-compliance while providing organisations with a structured mechanism to settle violations through compounding instead of facing full criminal prosecution.
The changes mark a shift from a relatively broad, programme-based framework to a far more prescriptive regulatory regime. 
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