The Karnataka High Court has recently emphasized that possessing a permanent registration under the 2010 Foreign Contribution (Regulation) Act (FCRA) does not grant an individual or organization the automatic right to have foreign donations credited into their bank account. The Court clarified that the process of receiving money from foreign sources and crediting it to a bank account is always contingent on obtaining clearance from the Union Ministry of Home Affairs (MHA).

Justice KS Hemalekha of the High Court underscored that the mere possession of permanent FCRA registration does not confer the privilege to directly receive funds in the designated savings bank account. This action remains subject to the approval of the Ministry of Home Affairs, which has the authority to scrutinize and approve foreign contributions.

The Court highlighted an official communication from the Government of India, stating that the MHA holds the power to categorize a foreign donor under the 'Prior Reference/Permission Category' based on inputs from field agencies or security sources.

These observations were made in response to a petition filed by the Manasa Centre for Development and Social Action, a society based in Bengaluru. The society had requested the release of funds withheld by the Development Credit Bank in 2013. The bank had withheld over ₹29 lakh, stating that clearance from the MHA was necessary before any remittance from the foreign donor, 'Dan Church Aid,' could be credited to the account.

Manasa argued that the funds in the account originated from various sources, not just 'Dan Church Aid.' However, the Court noted that the Reserve Bank of India had, in line with MHA's instruction, directed all banks in 2013 to inform the ministry about fund flows from 'Dan Church Aid' before clearance. The bank had followed this directive for two inward remittances received by Manasa from the donor. The MHA had explicitly directed the bank not to credit these funds without ministry clearance in a letter dated October 31, 2013.

The Court concluded that since the MHA's letter explicitly instructed the bank not to credit the funds from 'Dan Church Aid' without clearance, Manasa was not entitled to the funds. Consequently, the Court dismissed the petition, asserting that it lacked merit.

Manasa Centre for Development and Social Action was represented by Advocate Siji Malayil, while the Development Credit Bank was represented by Advocate VL Sreenath. Deputy Solicitor General Shanthi Bhushan represented the Union Ministry of Home Affairs.