The decision has been taken after a preliminary inquiry conducted by the home ministry found that the NGO was carrying out activities contrary to the Foreign Contribution Regulations Act under which it has to function.
Sources said with IRF being put into prior permission category, the RBI, henceforth, has to inform the home ministry about all funds coming to the NGO and permission has to be taken from the ministry before releasing them to the IRF.
They said that last month the home ministry had renewed the FCRA licence of the IRF despite several ongoing probes against the NGO and its founder Naik including one by the home ministry itself.
Taking strong exception to the goof-up, the home ministry suspended Joint Secretary G K Dwivedi, who was heading the foreigners division of the ministry looking after the FCRA-related issues, and three other officials.
Naik was accused of radicalising and attracting youths for terror acts.
Naik has come under the scanner of the security agencies after Bangladeshi newspaper Daily Star had reported that one of the attackers of the July 1 terror strike in Dhaka, Rohan Imtiaz, ran a propaganda on Facebook last year quoting Naik.
He, in a lecture aired on Peace TV, an international Islamic channel, had reportedly ‘urged all Muslims to be terrorists’.
Naik, a popular but controversial Islamic orator and founder of Mumbai-based IRF, is banned in the United Kingdom and Canada for his hate speeches aimed against other religions. He is among 16 banned Islamic scholars in Malaysia.
He is popular in Bangladesh through his Peace TV, although his preachings often demean other religions and even other Muslim sects.