Sweeping reforms under the Foreign Contribution Regulation Act (FCRA) have led to a widespread freeze on foreign funding for hundreds of registered societies across India, creating operational hurdles for many non-profits and charitable organizations.

The Ministry of Home Affairs, in its recent overhaul of the FCRA compliance framework, has tightened scrutiny norms and revised mandatory declarations for all NGOs and societies receiving foreign donations. Societies that failed to update their FCRA bank accounts, submit annual returns, or declare utilization of funds have found their accounts temporarily suspended or deactivated.

According to ministry data, nearly 1,500 organizations did not meet the March 31 deadline for compliance, leading to an automatic freeze of funds held in their designated FCRA accounts. These societies, which work in sectors ranging from health and education to rural development, are now struggling to pay salaries, continue field work, or meet project deadlines.

“We were dependent on donor grants for our educational outreach programs in tribal areas. The sudden fund block has forced us to halt operations,” said Ramesh Kumar, Director of a Delhi-based NGO.

The revised guidelines also require all FCRA funds to be received only through a designated SBI branch in New Delhi, creating logistical bottlenecks for rural and semi-urban societies.

While the government insists the measures aim to ensure greater transparency and prevent misuse of foreign aid, critics argue that smaller, compliant organizations are suffering due to blanket policies. Civil society networks have urged the Centre to adopt a phased compliance approach and offer support to societies that are genuine but lack digital infrastructure.

Officials have clarified that accounts will be reactivated upon full compliance, but for many, the freeze has already caused significant disruption.