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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Contribution Regulation

Vidya Foundation holds an FCRA certificate and has opened a second FCRA Account in a scheduled bank of its choice to utilise funds. A trustee proposes to deposit the Foundation's local rental income into that same account for convenience. What is the legal position?

It is not permitted. The Act provides that no funds other than foreign contribution may be received or deposited in an FCRA Account, so local rental income cannot be put into it, even if recorded separately in the books.

  1. APermitted, if the rental income is shown separately in the books
  2. BPermitted, if the amount is below the prescribed limit
  3. CNot permitted, as no funds other than foreign contribution may be received or deposited in such an accountCorrect
  4. DPermitted, but only with the bank's consent

Explanation

The third proviso to section 17(1) says no funds other than foreign contribution shall be received or deposited in any such account. Separate bookkeeping or the bank's consent does not cure the mixing of funds.

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