Treatment of FC / LC Accounts under Training programmes

Dear Friends,

One Indian Nodal Agency (first recipient) gave foreign funds to another NGO with FCRA (second recipient) for some specified project. The second recipient attended two training courses – one conducted by the first recipient and the second training course by another NGO without FCRA. The second recipient paid course fees from out of the foreign funds to both the first recipient and another NGO without FCRA. The questions are:

1. Should the first recipient credit the course fee into his FC Bank Account and show the course fee in his FC Account Books? OR Can he take it into his local account?

2. Is it wrong on the part of the second recipient to pay course fee from out of foreign funds to a Non-FCRA-NGO? Will the non-FCRA-NGO be taken to task by MHA for accepting foreign funds in the form of course fee?


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6 Responses to Treatment of FC / LC Accounts under Training programmes

  1. Jiwan Prakash Saha says:

    Dear uday,

    Jumping on the question no 1 : The fees should be taken under local account as it is an expenditure in the hands of second recipient.

    Ques 2 : Second recipient will not be taken to the task for doing so.


  2. My question is related to above.

    If Indian nodal agency transfer funds of FCRA to a Non-FCRA partner for implementation of activities, would that attracts a penalty to the non-FCRA partner by an MHA/

  3. C Udayashankar says:

    Thank you, friends. Special thanks to srrf for providing a meaningful platform.

  4. Subhash Mittal says:

    Dear Uday, A very good query you have given us to exercise our minds, it clears often quite misunderstood distinction between a grant transfer and transfer against expenditure / service. Comments by both the SRRF Dialogue members, Arvind & Soma (welcome Soma after a long absence) capture the essence of the problem.

    You may also see SRRF Advisory 001 in this regard at

  5. Soma Sastry says:

    Dear Uday Sir,

    Greetings from Hyderabad!

    1. The course fee can be taken to the LC account as this is a consideration for some service rendered by the recipient (Fee) organization. Where a transaction involves the process of “give and take”, the applicability of FCRA is not there. E. Consultancy from FC funds. It come into picture where is “take and take”. Eg. Grant to partners
    2. The organization is well within its right to pay the course fee from the FC account and they will not attract any penal provisions.

    Thanks and regards,

    Soma Sastry

  6. Arvind k Singh says:

    Dear All,
    There is only two ways to movement of FC funds.
    1. Transfer of Grant fund.
    2. Expenditure made from FC fund.

    In the given case, there is two type of fund transfer, in first case, transfer of grant fund from first recipient (R1)to second recipient (R2)(assumed that both are having FCRA registration) for implementation of project.

    Expenditure of FC Fund:-
    If R2 paid training fee to R1 then, it is expenditure of R2 in the books of FC but, R1 is the service provider only in this moment, then R1 can claim this as income in its N-FC books. (This is in same nature,as we hire a vehicle or purchase an stationery items from FC fund, vendor does not not bothered about FC and N-FC, he claim it as his income)

    Payment of training fee (simply fulfilling of service contact) is an expenditure, not a transfer of grant fund. So, permission of MHA is not required.


    Arvind k Singh

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