To prevent misuse of foreign funds by NGOs and to generate awareness on the huge foreign funding that flows into India, the home ministry will organise a two-day seminar on the Foreign Contribution (Regulation) Act (FCRA) here Friday.

Home Minister Shivraj Patil will inaugurate the seminar that is being supported by the Institute of Chartered Accountants of India. Nearly 1,000 delegates from across the country will participate in it.

Finance Minister P. Chidambaram will deliver the valedictory address Saturday.

"The basic purpose of the seminar is to create awareness among various stakeholders - NGOs, bankers, chartered accountants, doctors, academics - about provisions of FCRA related to receipt and use of foreign funds," K.P. Singh, additional secretary in the home ministry, told reporters here Wednesday.

Over 3,000 associations are registered under FCRA and more than $1 billion in foreign contributions is received annually by the voluntary sector.

The funds are used for various programmes, including healthcare, sanitation, education, social welfare, rural development and environmental conservation.

Admitting that funds were being misused by some, Singh said: "Some associations are doing a commendable job in their respective fields but still there are unscrupulous elements who are involved in nefarious activities in the garb of overt welfare schemes and projects.

"The home ministry's focus is to ensure that such associations which are engaged in anti-national or illegal activities are not allowed to function and at the same time to ensure that no hindrance is caused to genuine NGOs carrying out welfare projects."

Singh said though the home ministry had updated its website on FCRA in the interest of transparency, some associations were still violating provisions of the law.

He stressed that the government was keeping a close watch on all such activities.

"We are always on the lookout for those indulging in hawala operations (money laundering). It's always a cat-and-mouse game between defaulters and implementers of the law," he said.

Singh, however, denied the misuse of foreign contributions to fund some madrassas that are allegedly being used to organise anti-national activities.

A handbook on FCRA and two booklets on case studies and court rulings related to the law will be released at the seminar's inaugural session.