FCRA Amendment Bill 2026: Asset-Vesting Process Could Seize Foreign-Funded Assets

The Lok Sabha is considering an asset-vesting process that could affect hospitals, schools, churches and other property built with overseas donations when an organisation’s FCRA registration expires, is refused renewal, is surrendered or is cancelled.

The proposal appears in the FCRA Amendment Bill 2026, which remains pending as of August 11, 2026. Parliament has not enacted the proposed provisions.

The bill was introduced on March 25, 2026. Separate Foreign Contribution (Regulation) Amendment Rules, 2026, notified on June 22, are already in force.

The two measures should not be conflated. The proposed power to place assets under permanent government control would arise only if Parliament enacts the bill.

The government has indicated that it may consider referring the bill to a Joint Parliamentary Committee amid political opposition. That leaves room for changes to its treatment of expired registrations, historical property and mixed funding.

The central issue is whether an organisation can leave the foreign-donation regime while retaining property built years earlier with overseas money.

Registration could cease without cancellation

Proposed section 14B creates a new route called cessation of an FCRA certificate. It could apply after expiry if an organisation did not apply for renewal, if its renewal application was refused, or if the certificate was not renewed before it expired.

That would expand the circumstances beyond cancellation and voluntary surrender. Allowing a certificate to lapse could itself trigger the proposed property regime.

Proposed section 16A would place foreign contribution and assets created from it provisionally under a Designated Authority from the date of cancellation, surrender or cessation. The initial vesting would be temporary, but the organisation could no longer deal with the affected property as before.

The authority could take possession directly or through an administrator. It would supervise, manage, safeguard, preserve and maintain the assets. Where it considered that necessary in the public interest, it could also manage activities connected with the property.

An operating hospital or school could therefore face questions about practical control, not only legal ownership.

Restoration would depend on a prescribed period

The bill provides a route for an organisation to recover provisional control. If it receives a fresh FCRA certificate, obtains renewal or has its certificate restored through revision within the prescribed period, the authority must return the unutilised foreign contribution and provisionally vested assets, subject to prescribed conditions.

The proposal therefore treats initial vesting as an interim arrangement. The organisation would have an opportunity to regularise its status.

Failure to obtain fresh registration, renewal or restoration within that period would change the result. The contribution and assets created from it would become permanently vested in the Designated Authority.

A permanently vested asset would have to be applied for public purposes. The authority could transfer it to a Central or State Government ministry, department, authority, agency or local authority. It could also sell the property or dispose of it through another prescribed process.

The sale proceeds and remaining foreign contribution would be credited to the Consolidated Fund of India. A hospital could ultimately move to a government health authority, while other property could be sold.

A mixed-funded building could vest as a whole

The proposed treatment of domestic co-funding creates one of the bill’s hardest practical questions. Consider a ₹50-crore hospital financed with ₹20 crore from overseas donors and ₹30 crore from Indian donors.

The proposal would not simply place the foreign-funded 40% into the vesting mechanism. Proposed section 16A(2) says an asset created or acquired partly from foreign contribution and partly from other sources would vest wholly in the Designated Authority.

The organisation could then apply for return of a distinct or ascertainable portion created from non-foreign sources.

That distinction may be workable when separate funding sources produced separate buildings. It becomes harder when both sources paid portions of the same construction invoices.

If 40% of every invoice for a hospital wing came from FCRA funds and 60% from domestic donations, records might not identify which rooms, walls, elevators or land area represent the domestic-funded share.

PRS Legislative Research identified that difficulty, noting that mixed funding may make it difficult to determine a distinct or ascertainable domestic portion. Later improvements financed entirely from Indian resources could add another layer of accounting complexity.

Existing law already reaches some foreign-funded assets

The proposal would not create asset vesting for the first time. Under existing section 15, when an FCRA certificate is cancelled or an organisation surrenders it, unutilised foreign contribution and assets created from that contribution vest in a prescribed authority.

The proposed change lies in the broader triggers and the more detailed system for custody, management, restoration and disposal. Proposed section 16B would bring contributions and assets already vested under existing section 15 into the new Designated Authority framework after commencement.

Historical cases could become contentious. An organisation may have spent foreign money years ago, allowed its registration to lapse and continued operating the resulting property with Indian funding.

PRS has noted that the bill could have a retroactive effect in such situations. Transitional protections added by Parliament could materially change the outcome.

The June rules could pressure organisations to retain registration

The rules already in force add a separate renewal issue. An organisation is deemed to have undertaken reasonable activity in its chosen field for society’s benefit when it has utilised at least ₹10 lakh of foreign contribution during the preceding two financial years.

A rural library established with ₹20 lakh in foreign donations might spend only ₹4 lakh a year on operations while relying on Indian donations. It may no longer need substantial overseas funding.

PRS has pointed to the interaction between that activity threshold and the proposed property provisions. An institution that does not need new foreign money could still have an incentive to retain registration to protect an older asset.

The bill may also treat prior-permission projects differently from projects built while an organisation held ordinary FCRA registration. Prior permission generally covers a specified purpose, amount and source rather than continuing registration.

PRS has identified a possible difference between a school built under prior permission and an identical school built by a registered organisation that later declines renewal. The two assets could face different consequences under the proposal.

Religious character would be protected, but ownership is separate

The property provisions are drafted around FCRA status and funding source, not a particular faith. They could nevertheless affect churches, schools, hospitals, seminaries, community institutions and welfare facilities held by religious organisations.

Nagaland Chief Minister Neiphiu Rio has sought greater parliamentary scrutiny while referring to concerns raised by Christian organisations in the state. Government supporters reject claims that the proposal targets a particular religion, describing it as an accountability and national-security framework for foreign funds.

Proposed section 16A(7) contains a safeguard for a place of worship. If a permanently vested asset is wholly or partly a place of worship, the authority must entrust its management or operation in the prescribed manner and maintain the property’s religious character.

That safeguard does not guarantee that the same trust, society or religious organisation will continue to own or manage the property. A hospital, nursing school, college, hostel or welfare centre operated by a religious organisation is not automatically a place of worship.

The character and funding history of each asset could become important, particularly on campuses containing several types of buildings.

Renewal refusal could start a longer chain

PRS has identified a procedural concern involving renewal decisions. Neither the existing Act nor the proposed bill creates a specific statutory appeal against the Central Government’s refusal to renew an FCRA certificate comparable to certain appeals available for other FCRA decisions.

It also identifies no express requirement for a hearing before a renewal refusal. Under the proposed structure, the sequence could be: renewal refused, certificate ceases, assets provisionally vest, and permanent vesting follows if restoration does not occur within the prescribed period.

The bill would provide mechanisms for decisions by the new Designated Authority. Those mechanisms would be different from challenging the underlying refusal to renew.

Government says the bill fills an administrative gap

The government’s case begins with existing section 15. According to the bill’s Statement of Objects and Reasons, current law lacks a comprehensive statutory system for supervising, managing and disposing of property after foreign contribution and related assets vest.

The government says that gap has created administrative uncertainty and scope for misuse. The bill would establish a Designated Authority and provide rules for provisional and permanent vesting, management, restoration, defunct organisations, disposal and timelines for prior-permission funds.

Its broader position is that the FCRA framework supports transparency and accountability while preventing foreign financial flows from harming national interest, public order or national security. It also says the framework permits legitimate charitable activity.

The bill would not increase every penalty. The current general contravention provision allows imprisonment of up to five years. The proposal would reduce the maximum to one year and require prior Central Government approval before an investigation for an offence under the Act begins.

Organisations can map funding histories before Parliament acts

The proposed permanent-vesting mechanism is not yet operative. Institutions with foreign-funded property can nevertheless reconstruct their records before a dispute arises.

An internal review could identify:

• property acquired entirely with foreign contribution;
• property acquired entirely with Indian funds;
• buildings and land financed from both sources;
• construction and later improvements by funding source;
• present market and book values;
• title records;
• FCRA utilisation records;
• donor agreements;
• historical bank records; and
• current renewal status.

A decades-old hospital financed through multiple donations may be difficult to trace after records disappear. Contemporary documentation could help establish whether a domestic-funded portion is distinct or ascertainable.

Foreign foundations, charities, churches and philanthropic organisations also have an interest in the result. Future agreements may need to address operating expenses, capital assets, mixed contributions, ownership, disposal restrictions, record retention and changes in the recipient’s FCRA status.

Donor classification matters as well. Government guidance distinguishes an Indian citizen living abroad from a person of Indian origin who has acquired foreign citizenship. Organisations should determine whether a receipt constitutes foreign contribution rather than relying only on where the transfer originated.

That classification becomes more consequential when the money creates land, buildings or equipment.

As of August 11, 2026, the bill remains pending in the Lok Sabha. Parliament may still change the treatment of expired registrations, historical assets, mixed funding, restoration periods, renewal procedures, religious institutions and safeguards before permanent vesting.

This article provides general information and is not legal advice. Consult a qualified immigration attorney about your specific case.