Union Minister of Home Affairs and Cooperation Amit Shah has introduced the Foreign Contribution (Regulation) Amendment Bill, 2026 in the Lok Sabha.

The proposed legislation seeks to plug "operational and legal gaps" in the existing 2010 Act, specifically focusing on how foreign funds and assets are managed when an organisation’s registration is cancelled or expires.

The biggest change is that if an NGO’s FCRA registration is cancelled, surrendered or not renewed, its foreign funds and assets can be taken over by a government-appointed authority.

The Bill introduces a new system where the government can step in and take control of funds and assets if an NGO loses its FCRA registration.

“The foreign contribution and the assets created out of foreign contribution… shall… vest provisionally in the Designated authority.”

If the NGO does not regain registration, this control becomes permanent.

“If the person…fails to obtain a fresh certificate…the foreign contribution and the assets…shall thereupon stand permanently vested in the Designated authority.”

The Bill goes a step further by allowing the government to use or dispose of such assets.

“The Designated authority shall apply the foreign contribution and the assets permanently vested in it for public purposes…”

This effectively allows the State to redirect NGO assets for public use. It can also sell or transfer these assets.

The Bill clarifies when an NGO’s licence will automatically lapse, removing ambiguity in the current law.

“The certificate shall be deemed to have ceased on the expiry of its period of validity if… the application for renewal has not been made… [or]… refused…”

Once this happens, the NGO immediately loses the right to handle foreign funds.

Even during suspension (before cancellation), the Bill tightens controls. NGOs are mandated to:

“...not alienate, encumber or otherwise deal with any asset created out of the foreign contribution, except with the prior approval of the Central Government.”

This ensures that NGOs cannot dispose of or move assets while under scrutiny.

The Bill makes two parallel changes - it reduces jail time, but widens who can be held responsible.

On punishment, the law softens the penalty for violations.
“…shall be punished with imprisonment for a term which may extend to one year, or with fine, or with both.”

This is a significant drop from the earlier maximum of five years.

However, the Bill simultaneously expands the net of liability. Instead of focusing only on the organisation, it directly targets the individuals running it.

“Every key functionary…shall be deemed to be guilty of the offence…”

In effect, this means that directors, trustees, partners and office-bearers can be personally prosecuted, unless they prove lack of knowledge or due diligence.

So, while the punishment itself is diluted, accountability is strengthened by making those in charge personally answerable for violations, rather than allowing liability to remain confined to the entity alone.

Justifying the need for these amendments, the Bill's Statements of Objects and Reasons states:

"...multiplicity of investigations, inconsistency in penalties, absence of timelines for utilisation, lack of express provision for cessation of registration, and ambiguity regarding treatment of assets during suspension have resulted in implementation challenges."

[Read Bill]