The gazette notification, issued by the Home Ministry, said that Islamic Research Foundation (IRF) has violated certain provisions of Foreign Contribution Regulations Act and therefore "would obtain prior permission from central government before accepting any foreign contribution".
Issuance of a gazette notification under Section 11(3) of the FCRA 2010 is a rare instance and such an act could also be done through an official order, sources said.
The Home Ministry said the decision has been taken after a preliminary inquiry conducted by it found that the NGO was carrying out activities contrary to the provisions of the FCRA under which it has to function.
The Reserve Bank of India, 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 IRF. Sources said last month the Home Ministry had renewed the FCRA licence of IRF despite several ongoing probes against the NGO and its founder Zakir Naik including one by the Home Ministry itself.
Taking strong exception to the goof-up, the Home Ministry suspended Joint Secretary GK Dwivedi, who was heading the foreigners division of the ministry looking after the FCRA-related issues, and three other officials.
Mr Naik was accused of radicalising and attracting young people for terror acts.
Mr 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 Mr Naik.
He, in a lecture aired on Peace TV, an international Islamic channel, had reportedly "urged all Muslims to be terrorists".
Mr Naik, a popular but controversial Islamic orator and founder of Mumbai-based IRF, is banned in the UK and Canada for his hate speeches aimed against other religions. He is among 16 banned Islamic scholars in Malaysia.