Rule 16 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 16 puts a duty on the bank, not on the NGO. The bank shall report to the Central Government, within forty-eight hours, any transaction in respect of receipt or utilisation of any foreign contribution by any person, whether or not that person is registered or granted prior permission under the Act. It works alongside section 17(2) of the Act.
This article reads rule 16 as per the copy consulted: the third-party consolidation of the Rules as they stood on 17 September 2019, where rule 16 is shown as substituted by G.S.R. 966(E) dated 14.12.2015. No official notification held amends or reproduces rule 16, so the rule rests only on that copy and the reader must confirm it against the official text. The latest notification consulted for the Rules generally is S.O. 3272(E) dated 22 June 2026, which does not touch rule 16. Later amendments should be checked. For banking and compliance questions around foreign remittances, our FEMA advisory service is a separate service that covers a different law.
The bank shall report to the Central Government within forty-eight hours any transaction in respect of receipt or utilisation of any foreign contribution by any person, whether or not that person is registered or granted prior permission under the Act. The duty is the bank's. Section 17(2) of the Act separately requires the designated bank branch, the branch where the foreign contribution account is held, and the authorised person in foreign exchange to report to a specified authority.
What rule 16 says
As the copy consulted prints it, rule 16 is headed "Reporting by banks of receipt of foreign contribution", and reads:
"The bank shall report to the Central Government within forty-eight hours any transaction in respect of receipt or utilisation of any foreign contribution by any person whether or not such person is registered or granted prior permission under the Act."
| Element | Text |
|---|---|
| Who reports | The bank |
| To whom | The Central Government |
| When | Within forty-eight hours |
| What | Any transaction in respect of receipt or utilisation of any foreign contribution |
| About whom | Any person, whether or not registered or granted prior permission |
Reading the rule
- A duty on the bank. An organisation does not file anything under this rule. What it can do is know that its transactions will be reported, and keep its FCRA Account clean.
- Both receipt and utilisation. The report covers a transaction in respect of receipt and a transaction in respect of utilisation of foreign contribution.
- Registered or not. The rule covers "any person", so an unregistered person's receipt is also reported.
- Forty-eight hours. The text does not say from when the forty-eight hours run, other than "any transaction", and lists no particulars to be reported.
- Which "bank". Section 2(1)(c) of the Act defines "bank" as a banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949; check the current law for the corresponding provision. The definition of "authorised person in foreign exchange" in section 2(1)(b) refers to clause (c) of section 2 of the Foreign Exchange Management Act, 1999; see our post on the Foreign Exchange Management Act, 1999, section 2 for that separate law.
Slip to note. The consolidation consulted prints rule 16 twice, one after the other. The second printing is a longer text with sub-rules, the superseded 2011 text, evidently printed again by mistake; this article does not rely on it. Confirm the current text against the official Rules.
The link with section 17(2)
Section 17 was substituted by paragraph 12 of the Amendment Act, 2020. Sub-section (2) reads that "the specified branch of the State Bank of India at New Delhi or the branch of the scheduled bank where the person referred to in sub-section (1) has opened his foreign contribution account or the authorised person in foreign exchange, shall report to such authority as may be specified" three things: "(a) the prescribed amount of foreign remittance; (b) the source and manner in which the foreign remittance was received; and (c) other particulars, in such form and manner as may be prescribed".
| Provision | Reporter | Reports to | Content |
|---|---|---|---|
| Section 17(2) | Specified SBI branch, the scheduled bank branch where the account is, or the authorised person in foreign exchange | "such authority as may be specified" | The prescribed amount of foreign remittance; source and manner; other particulars, in the form and manner prescribed |
| Rule 16 | The bank | The Central Government | Any transaction in respect of receipt or utilisation, within forty-eight hours |
Section 48(2)(r) lists "the prescribed amount of foreign remittance, the form and manner" for reports under section 17(2) as a rule-making head. Rule 16 is the rule on the subject, but it speaks of "any transaction" and of the Central Government, and the Rules held do not say that rule 16 is made under that head. The branch of the State Bank of India is to be specified by the Central Government by notification, which is not among the texts consulted; so no branch is named here. See the article on section 17 and the article on sections 48 and 49.
Why it matters to the recipient
- Everything on the account is visible. Because the bank reports receipt and utilisation transactions, entries in the FCRA Account and utilisation accounts should be consistent with the intimations and returns you file. See the article on rule 17.
- Only foreign contribution in the account. The last proviso to section 17(1) says no funds other than foreign contribution shall be received or deposited in any such account. A mixed account will produce reports that do not match your books.
- Compounding for banks and authorised persons. The compounding table under section 41 has an entry at serial number 5(b) for the offence under section 37 read with section 17 of "non-reporting the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorised persons", with an amount of one lakh rupees or three per cent. of the foreign contribution received or deposited in such account, whichever is higher. See the article on section 41.
Example (invented). The Kiran Seva Samiti is not yet registered, but a donor abroad sends it money for a relief project, and it is credited to the Samiti's ordinary account. Rule 16, as the copy consulted prints it, covers a transaction in respect of receipt of foreign contribution by "any person whether or not ... registered". The bank must report the transaction to the Central Government within forty-eight hours. The Samiti should expect the receipt to be on the Government's record from then and should take advice on its position under section 11.
Need help with foreign remittances and your bank?
Where a remittance has arrived in an account that is not an FCRA Account, or from a source you did not expect, speak to an adviser before the next return. Our FEMA advisory team can review the remittance documents; the FCRA position should be reviewed alongside it.
Key takeaways
- Rule 16 puts the reporting duty on the bank, within forty-eight hours of any transaction in respect of receipt or utilisation.
- It applies whether or not the person is registered or granted prior permission.
- Section 17(2) separately requires reporting by the designated branch, the branch where the account is held, and the authorised person in foreign exchange.
- The rule rests only on the third-party copy, which prints rule 16 twice; confirm against the official text.
- The compounding table lists non-reporting by banks and authorised persons at serial number 5(b).
Read next
- Section 17: FCRA Account for receiving foreign contribution
- Rule 17: annual return in Form FC-4
- Rules 15 and 15A: custody after cancellation and voluntary surrender
- Section 41: compounding of offences
Disclaimer: Based on the Foreign Contribution (Regulation) Act, 2010 as enacted, read with the Amendment Act, 2020 and the other amendments named in this article, and on the Foreign Contribution (Regulation) Rules, 2011 as amended by the notifications named (latest consulted: S.O. 3272(E) dated 22 June 2026), as consulted on 2 October 2026. No consolidated official text was available; some provisions rest on a third-party copy and are identified as such. Later amendments, notifications and Ministry of Home Affairs orders should be checked. This article is general information, not legal advice; check the official text before acting.