Banking · FCRA Regulations and NGO Account Opening
A branch receives an application for a current account from a newly formed Public Charitable Trust. They provide the Trust Deed, Registration Certificate, and PAN card. During due diligence, the bank finds that the Trust has received a donation of ₹50 lakh from an anonymous source in Qatar. The NGO does not yet have FCRA registration, but requests immediate account activation to pay construction contractors. What is the correct operational response?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Suggest opening a personal savings account in the name of a trustee to bypass NGO KYC guidelines.
- 2Open the account immediately but submit a Suspicious Transaction Report (STR) to FIU-IND due to the foreign anonymous transfer.
- 3Refuse to open the account until FCRA registration is obtained, as receiving foreign funds without FCRA compliance violates Indian law.✓
- 4Open the account since the trustees are prominent local businessmen with clean track records.
Correct answer
Refuse to open the account until FCRA registration is obtained, as receiving foreign funds without FCRA compliance violates Indian law.
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