Treatment of Interest received

Posted on April 25, 2014 by SRRF

Respected sir/friends

Please gave your suggestion on Interest received from FCR Account. Actually as per the directions of the funding agency we transferred the amount from FCR Account to General Account (spl account only for those funding agency) for the operational  purpose. On quarterly basis. Now we got some interest from this (general bank a/c).  we feel this is also treated a FCR Account or Not?

Please give your suggestions on this issue.

SV Reddy
Finance Officer
HELP, 2nd lane, Sujatha nagar,
Lawyer pet Ext, ONGOLE – 523 002. A.P

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5 Responses to Treatment of Interest received

  1. Subhash Mittal says:
    April 28, 2014 at 6:47 am

    Dear Mr Reddy,

    Please ensure that when you talk of General Account, it is a Utilisation Account within the definition of FCRA Act, i.e. you should have intimated FCRA Dept. within 30 days that a Utilisation Account has been opened. It must not be the bank account maintained in your local books. Since interest earned on FCRA Contribution must always be treated as FCRA.

    You must not transfer interest earned on FCRA bank account to local account. As far as how the amount be treated within FCRA books, in case the donor asks interest to be treated as part of its grant, then the same treatment can be given in books, however if the donor has not asked for the same, it may be kept as part of General Reserves within in FCRA books. Its utilisation would also need to be disclosed at sometime or other.

    warm rgds

  2. Sarita Sharma says:
    April 26, 2014 at 7:43 am

    Dear Friends,
    Greetings from Mobile Crèches!

    As per my views regarding treatment of FCRA Interest received are as follows:-

    1. As per FC(R) Act 2010 an FCRA registered organization can open multiple linked saving bank accounts under section 17(1) of the act & these related with FCRA.
    2. FC earmarked /specified Grants, whose spl separate account only for those funding agency where the donor agency specifically requires to do so OR as per your requirements (Already Information of separate Bank details send to MHA).
      This is just separate bank account treated as FCRA account only for project utilization (Grant/Interest & expenses related with FCRA).
    3. In Balance sheet also you have to show additional FCRA separate Bank account( utilization purpose) balance with FCRA Bank account balance.

    Thanks with regards,

    Sarita Sharma

  3. H D Bist says:
    April 26, 2014 at 6:52 am

    As per my old ground level work ,the interest received from FCRA is to be treated as 2nd instalment from the donor agency! I will be happy to know the details of the problem inunciated.

    H D Bist

  4. Prabhjot Sodhi says:
    April 26, 2014 at 6:17 am

    This is an important issue. We in the FCRA account projects ensure that the interest accrued is accounted in the receipts and used for the project activities and taking the ‘interest’ into account in the utilization certificate under information to the funding agency.

    With Warm Regards,

    Prabhjot Sodhi
    Country Program Manager
    GEF UNDP/SGP, CEE
    C-40; South Extension Part II
    New Delhi 110049

  5. B V Soma Sastry says:
    April 26, 2014 at 6:14 am

    Dear S V Reddy,
    Greetings from Hyderabad!

    As per the agreement with the donor, the interest component of the funds is being transferred to the General Account and once this is done, the money becomes that of our organization and unrestricted in nature. I am assuming that this General Account is part of the FC books as funds cannot be transferred from FC to non FC account.

    Now that you have earned interest on the General Account, the fund would remain in the General Account of the organization and unrestricted in nature. Also, any income earned on the the FC funds is FC in nature. So far as the interest is concerned, the amount will be reflected as 2nd recipient while filing FC-6.

    I hope your query is answered.

    Thanks and regards,

    B V Soma Sastry

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