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FEFI Previous Year Questions & Exam-Pattern Practice (2026)

IIBF doesn't release official question papers. Practice these exam-pattern recall questions instead — modeled on the current FEFI syllabus and difficulty, with answers and explanations.

15 hard practice questions Answers + explanations included

Why "previous year questions" don't officially exist for FEFI

IIBF does not publish past question papers, and no verified bank of actual previous-year questions exists anywhere. Every question on this page is an exam-pattern practice question written to match the current Foreign Exchange Facilities for Individuals syllabus and difficulty — it is not an actual exam question. That's the honest way to prepare for the recall-based pattern.

FEFI subject

Foreign Exchange Facilities for Individuals

FOREIGNEXCHA mock tests →
1

The principal objective behind regulating the acceptance and utilization of foreign contribution and foreign hospitality under FCRA is best described as ensuring that such funds are not directed toward a particular outcome. Which outcome is targeted?

  1. A. Reduction of the fiscal deficit of the Central Government
  2. B. Any activity that is against national interest
  3. C. Promotion of foreign direct investment in priority sectors
  4. D. Enhancement of foreign exchange reserves of the country
Show answer & explanation

Correct answer: B. Any activity that is against national interest

The source states FCRA's main objective is to ensure foreign funds are not used for any activity against national interest. A, C and D describe economic or monetary aims that the Act does not pursue; FCRA is a regulatory law on contribution acceptance, not a fiscal, FDI, or reserves-management instrument.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
2

A serving government servant is personally offered foreign contribution for his private use. Under Section 3(1), what is the position?

  1. A. He may accept it if the amount is below Rs. 1 crore
  2. B. He is among the categories prohibited from receiving foreign contribution
  3. C. He may accept after intimating his department within 30 days
  4. D. He may accept only through the designated SBI account
Show answer & explanation

Correct answer: B. He is among the categories prohibited from receiving foreign contribution

Section 3(1) lists a government servant among persons prohibited from receiving foreign contribution. A confuses the Rs. 1 crore bank-reporting threshold with an acceptance entitlement; C and D describe compliance mechanics that cannot cure an outright prohibition on a prohibited person.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
3

A bank receives a foreign inward remittance into an account of a person who holds neither registration nor prior permission, and the remittance is credited. From a compliance-judgement standpoint, what should the bank do?

  1. A. Treat it as routine and take no action
  2. B. Report the receipt within 30 days, as it is a receipt by a person without registration/prior permission
  3. C. Wait for the recipient to apply for registration before reporting
  4. D. Return the money and report only after 90 days
Show answer & explanation

Correct answer: B. Report the receipt within 30 days, as it is a receipt by a person without registration/prior permission

Where foreign contribution is received by a person without registration/prior permission, the bank must report within 30 days. A ignores the mandatory monitoring duty; C invents a wait condition; D mixes the 90-day disposal period with reporting and overlooks that the funds were credited, not returned. (Note: only a returned remittance—not credited—escapes reporting.)

Study this chapter: Foreign Contributions Regulation Act (FCRA)
4

Which of the following is the MOST accurate description of the categories newly tightened by the FCRA Amendment Act, 2020 regarding persons prohibited from accepting foreign contribution?

  1. A. Judges were removed from the prohibited list
  2. B. Public servants were added to the prohibited list
  3. C. Candidates for election were exempted
  4. D. Political parties were permitted to receive foreign contribution
Show answer & explanation

Correct answer: B. Public servants were added to the prohibited list

The source states the 2020 amendment added public servants to the list of persons prohibited from accepting foreign contribution. A, C and D each describe a loosening that did not occur—judges, election candidates, and political parties remain within the prohibited framework.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
5

Assertion (A): An article received from a foreign source and then transferred by the recipient to another person is still deemed foreign contribution. Reason (R): Once a receipt qualifies as foreign contribution, subsequent transfer does not strip it of that character.

  1. A. Both A and R are true, and R is the correct explanation of A
  2. B. Both A and R are true, but R is not the correct explanation of A
  3. C. A is true, R is false
  4. D. A is false, R is true
Show answer & explanation

Correct answer: A. Both A and R are true, and R is the correct explanation of A

Explanation 1 states that an article, currency, or security received from a foreign source and then transferred to another person is still deemed foreign contribution. The reason correctly explains why—the character attaches at receipt and survives onward transfer. Hence A is the best fit; B, C and D mischaracterize the truth or the explanatory link.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
6

After receiving funds in its designated FCRA account, an association opens a separate Utilization Account to spend the funds. Two facts apply: the utilization account must hold only foreign contribution, and intimation must be filed. Which combination is correct?

  1. A. Intimation in Form FC-3 within 30 days; other funds allowed
  2. B. Intimation in Form FC-6 within 15 days; no funds other than foreign contribution allowed
  3. C. Intimation in Form FC-6 within 90 days; mixed funds allowed
  4. D. Intimation in Form FC-3 within 15 days; only domestic funds allowed
Show answer & explanation

Correct answer: B. Intimation in Form FC-6 within 15 days; no funds other than foreign contribution allowed

Conditions for utilization accounts: no funds other than foreign contribution may be received, and intimation in Form FC-6 must be given online within 15 days of opening. A and D wrongly cite FC-3 (the application form) and allow other/domestic funds; C wrongly states 90 days and mixed funds.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
7

A foreign relative ships an article to an Indian resident as a personal-use gift. The article's market value in India is Rs. 24,000. How is this receipt treated under FCRA?

  1. A. Foreign contribution, because all articles from a foreign source qualify
  2. B. Not foreign contribution, since it is a personal-use gift within the prescribed limit
  3. C. Foreign contribution, because gifts above Rs. 10,000 are always covered
  4. D. Not foreign contribution, only if it is also a currency receipt
Show answer & explanation

Correct answer: B. Not foreign contribution, since it is a personal-use gift within the prescribed limit

An article gifted for personal use is not foreign contribution if its market value in India does not exceed the prescribed limit of Rs. 25,000; Rs. 24,000 is within that ceiling. A ignores the personal-use exemption; C invents a Rs. 10,000 figure that is the registration fee, not the gift threshold; D wrongly conditions the article exemption on a currency receipt.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
8

An association seeking FCRA registration must have spent a minimum amount over the last 3 years on its aims and objects, excluding administrative expenditure. What is this minimum figure?

  1. A. Rs. 1,00,000
  2. B. Rs. 5,00,000
  3. C. Rs. 10,00,000
  4. D. Rs. 25,00,000
Show answer & explanation

Correct answer: C. Rs. 10,00,000

The eligibility table requires minimum expenditure of Rs. 10,00,000 over the last 3 years on aims and objects, with administrative expenditure excluded. A, B and D do not match the stated figure; Rs. 5,000 and Rs. 10,000 in the source are the prior-permission and registration fees, not the expenditure requirement.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
9

An Indian educational institution receives a tuition fee from a foreign student studying in India. A clerk records it as "foreign contribution" because the payer is foreign. Which statement correctly identifies the error?

  1. A. Correct treatment; any money from a foreign payer is foreign contribution
  2. B. Incorrect; fees charged by an educational institution in India from foreign students are excluded from foreign contribution
  3. C. Correct, but only if the fee exceeds Rs. 25,000
  4. D. Incorrect; such fees are foreign contribution only if received through an agent
Show answer & explanation

Correct answer: B. Incorrect; fees charged by an educational institution in India from foreign students are excluded from foreign contribution

Explanation 3 to the definition expressly excludes fees charged by an educational institution in India from foreign students. A is the trap—source of the payer alone is not decisive. C wrongly imports the gift-article threshold. D inverts the rule: amounts received through an agent toward such fee/cost are likewise excluded, not included.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
10

Consider these statements about the designated FCRA bank account: 1. Foreign contribution should be received only in the exclusive FCRA Account with SBI, Main Branch, New Delhi. 2. There is a prescribed minimum balance requirement for FC accounts under FCRA. Which is/are correct?

  1. A. Only 1
  2. B. Only 2
  3. C. Both 1 and 2
  4. D. Neither 1 nor 2
Show answer & explanation

Correct answer: A. Only 1

Statement 1 is correct—receipt must be in the exclusive FCRA Account at SBI New Delhi Main Branch. Statement 2 is false: the source expressly says there is no minimum balance requirement in FC accounts under FCRA. Hence only 1 is correct.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
11

Consider the following statements about what is treated as foreign contribution under Section 2(1)(h): 1. Currency received from a foreign source, whether Indian or foreign currency, is foreign contribution. 2. Interest earned on foreign contribution held in the designated account is itself foreign contribution. Which is/are correct?

  1. A. Only 1
  2. B. Only 2
  3. C. Both 1 and 2
  4. D. Neither 1 nor 2
Show answer & explanation

Correct answer: C. Both 1 and 2

Statement 1 reflects the rule that any money from a foreign source, in Indian or foreign currency, is foreign contribution. Statement 2 reflects Explanation 2: interest and income derived from foreign contribution are also foreign contribution. Both are accurate, so A, B and D are wrong.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
12

The administrative expenditure ceiling under the current FCRA framework (post-2020 amendment) is set at what percentage of foreign contribution?

  1. A. 50%
  2. B. 30%
  3. C. 20%
  4. D. 10%
Show answer & explanation

Correct answer: C. 20%

The 2020 amendment reduced the administrative expense limit from 50% to 20%; the current ceiling is 20% of foreign contribution. A is the pre-amendment limit; B and D are not figures stated in the source for this cap.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
13

An Indian company has 55% of its nominal share capital held by foreign citizens and foreign corporations. For FCRA purposes, which is the best characterization of this company as a payer?

  1. A. It is not a foreign source because it is incorporated in India
  2. B. It is a foreign source because more than one-half of its nominal share capital is foreign-held
  3. C. It is a foreign source only if it is a multinational corporation
  4. D. It is exempt like UN bodies
Show answer & explanation

Correct answer: B. It is a foreign source because more than one-half of its nominal share capital is foreign-held

An Indian company is a foreign source where more than one-half of its nominal share capital is held by foreign government, citizens, corporations, trusts/societies, or companies; 55% exceeds one-half. A wrongly treats Indian incorporation as decisive; C adds an MNC condition that does not apply; D wrongly extends the UN/World Bank/IMF exemption to an ordinary Indian company.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
14

A single foreign donor (an individual) wishes to fund an Indian recipient organization in which the donor is also involved. Which condition must be satisfied where donor and recipient share common members?

  1. A. The donor individual must be the Chief Functionary of the recipient
  2. B. At least 51% of office-bearers of the recipient should not be family members or close relatives of the donor
  3. C. 100% of the governing body must be members of the donor organization
  4. D. There is no restriction once a commitment letter is filed
Show answer & explanation

Correct answer: B. At least 51% of office-bearers of the recipient should not be family members or close relatives of the donor

Where there is a single foreign donor, at least 51% of office-bearers/members of the recipient should not be family members or close relatives of the donor. A inverts the rule—the single individual donor should NOT be the Chief Functionary; C contradicts the safeguard that members should not be drawn from the donor body; D wrongly treats the commitment letter as overriding the common-member safeguards.

Study this chapter: Foreign Contributions Regulation Act (FCRA)
15

An organization still in its formative stage approaches the Central Government to receive a specific grant from one named foreign donor for a single defined project. Which route fits its situation?

  1. A. Registration, since formative-stage entities are preferred for registration
  2. B. Prior permission, granted for a specific amount, specific donor, and specific project
  3. C. Neither route is available to formative-stage entities
  4. D. Permanent registration with lifetime validity
Show answer & explanation

Correct answer: B. Prior permission, granted for a specific amount, specific donor, and specific project

A formative-stage organization is not eligible for registration and may apply for prior permission, which is granted for a specific amount, specific donor, and specific project/activity—exactly this fact pattern. A is wrong because formative entities are excluded from registration; C is wrong because prior permission is available; D refers to abolished permanent registration.

Study this chapter: Foreign Contributions Regulation Act (FCRA)

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