Transfer of funds between FCRA registered entities

Gkannan (manager) (77 Points)

23 March 2022  

Dear Experts,

FCRA Act Under the recent amendment it is prohibited to transfer funds from one FCRA registered entity to another FCRA registered entity

for example,  We  have two FC registered Trust. A & B.   We raise debit notes from A to B and the same is settled by B within the month.  and viceversa.  for example A incurrs  employee salary expenses on behalf of B. whihc is re-imbursed by B during the next month. our auditors are of the view that since transfer of funds is prohibited between two FCRA registered entities,  it is necessary that no transactions like debit note/credite should be made.  Does this amounts to transfer of funds between the entities as per the recent amenement.

Please clarify as per FCRA act.

Thanks