How do we settle advances of staff in FCRA?
We have a vehicle revolving fund from a FC donor, where an advance is given for vehicle to staff and they repay in installments.
When we deposited in the FCRA receipt bank account the bank refuses to credit the same even after explaining the situation.
Thomas Mathews
Thank you Santosh George for a very practical support.
Is it not necessary to maintain two registers – one for FC vehicle revolving fund and another for LC vehicle revolving fund? If the EMI is deducted from the salary, the staff member has to sign the salary voucher with full particulars of deductions and the EMI amount should be credited into the FC or LC vehicle revolving fund register. is it not?
The vehicle revolving fund is foreign (in our case) and salary is being paid from Indian and foreign to staff/employee. Hence we collect post dated cheques from staff/employee to deposit in our FCRA bank account against the loan. The bank now refuses to accept the same, citing that only foreign contributions can be received in the FCRA bank account. We have approached the bank with the bank charter and the response we received from a SRRF member and also the grant letter for the revolving fund. They have sent it to Regional Office for confirmation. No response received yet. We need to take this to the logical conclusion with banks.
You can credit this amount to the Vehicle revolving fund account and debit the cash in the cash book if it is paid in the form of cash or if it is recovered through the salary book then debit the particular staff’s salary account in the salary book and this will solve the problem. You need not go to the Bank at all for depositing this amount. This matter will automatically get settled within the books. I hope you are now clear.
The salary received for some employees are from Indian. That is when the complication starts. If employee salary was Foreign and loan is foreign your suggestion is valid.
Thanks
It is understood that the organization has an endowment type fund which is for the purpose to provide advance to employees for purchasing vehicle. When the employee settle this advance monthly (EMI model) the bank refuses to accept the cheque with a view that the source is local not foreign.
This is one of a common issues being faced by NGOs with banks. Banks normally does not accept a Cheque against the balance of advance received from a hotel or a Program Centre with view that the source of the payment from a local source. But actually nothing wrong to re-deposit any amount to FC bank account which is balance of amount originally paid as program advance or advance paid for any other purpose.
The “bank charter” of FCRA make it very clear. The point no. 8 of clarification note in the bank charter says it is allowed to “Re-depositing underutilized FC drawn as advance for some purpose in the normal course of running the organisation, such as, foreign/ local tour/ project advance/ advances to an employee etc.”
So you can contact the bank with a copy of bank charter for their information. The link of bank charter is: https://fcraonline.nic.in/home/PDF_Doc/Charter_for_Banks.pdf
Thanks. Was very helpful.