Foreign Contribution Regulation Act (FCRA) was enacted in 1976 to regulate foreign donations and ensure that such contributions do not adversely affect the internal security of the country. Read here to learn all about the FCRA Act and its amendments.
Economic Security is one of the bases for the enactment of the Foreign Contribution Regulations Act.
The FCRA applies to all associations, groups, and NGOs which intend to receive foreign donations. All such NGOs must register themselves under the FCRA.
This legal Provision is not only meant for NGOs but also for Political Organisations and Political Parties. Moreover, the 2010 Amendment Act has also included electronic media companies and “organizations of a political nature” to the list.
Foreign Contribution and Regulations Act, 1976
FCRA was passed in 1976 during the Emergency as a result of concerns that foreign governments were funding independent organizations to meddle in India’s internal affairs.
The law aimed to control foreign donations to organizations and people to ensure that they operated by the principles of a sovereign democratic republic.
All associations, groups, and NGOs that wish to accept foreign donations must comply with the FCRA.
- All of these Organizations are required by law to register with the FCRA.
- If all requirements are met, the registration can be renewed after the original five-year period.
- For social, educational, religious, economic, and artistic goals, registered groups are permitted to accept contributions from outside.
- It is required to file annual returns similar to those for income tax.
The MHA published new regulations in 2015 that required NGOs to certify that accepting foreign funding would not adversely damage India’s sovereignty and integrity, its amicable ties with other states, or cause racial unrest.
Also, all such NGOs would have to operate accounts in either nationalized or private banks which have core banking facilities to allow security agencies access on a real-time basis.
Foreign Contribution and Regulations Act, 2010
It is an integrating act to regulate how certain people, associations, or companies may accept and use foreign contributions or foreign hospitality.
It also covers outlawing the acceptance and use of such contributions or hospitality for any activities that are harmful to the national interest or that are related to or incidental to those activities.
The Act regulates the acceptance and utilization of foreign contributions by individuals, associations, and companies. Foreign contribution is the donation or transfer of any currency, security, or article (of beyond a specified value) by a foreign source.
Under the Act, certain persons are prohibited to accept any foreign contribution.
- These include election candidates, editors or publishers of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
Foreign contributions cannot be transferred to any other person unless such person is also registered to accept foreign contributions (or has obtained prior permission under the Act to obtain foreign contributions).
If a person accepting foreign contributions is found guilty of violating any provisions of the Act or the Foreign Contribution (Regulation) Act, 1976, the unutilized or unreceived foreign contribution may be utilized or received, only with the prior approval of the central government.
It is intended to address shortcomings in the 1976 predecessor statute.
Foreign Contribution (Regulation) Amendment Bill, 2020
The Bill amends the Foreign Contribution (Regulation) Act, of 2010.
The Bill adds public servants (as defined under the Indian Penal Code) to the list of persons prohibited to accept any foreign contribution.
- Public servant includes any person who is in service or paid by the government or remunerated by the government for the performance of any public duty.
The Bill amends the 2010 act to prohibit the transfer of foreign contributions to any other person. The term ‘person’ under the Act includes an individual, an association, or a registered company.
The Bill adds that any person seeking prior permission, registration, or renewal of registration must provide the Aadhaar number of all its office bearers, directors, or key functionaries, as an identification document.
- In the case of foreigners, they must provide a copy of their passport or the Overseas Citizen of India card for identification.
The Bill amends the act of 2010 to state that foreign contributions must be received only in an account designated by the bank as an “FCRA account” in a such branch of the State Bank of India, New Delhi, as notified by the central government.
The Bill adds that the government may also restrict the usage of unutilized foreign contributions for persons who have been granted prior permission to receive such contributions.
The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:
- is not fictitious or benami
- has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion,
- has not been found guilty of diversion or mis-utilisation of funds, among others conditions.
Under the 2010 Act, a person who receives a foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses.
- The Bill reduces this limit to 20%.
FCRA 2022 Amendment
In July 2022, the MHA brought changes to FCRA rules which increased the number of compoundable offenses under the Act from 7 to 12.
The other key changes were:
- exemption from intimation to the government for contributions less than Rs 10 lakh, the earlier limit was Rs 1 lakh, received from relatives abroad.
- increase in the time limit for intimation of the opening of bank accounts.
The Centre has also omitted provision ‘b’ in rule 13, which dealt with declaring foreign funds including details of donors, the amount received, and the date of receipt every quarter on its website.
Now only once a year the organizations in FCRA can file the audited balance sheet on the website of the Ministry or also on their website.
The Foreign Contribution Regulations Act is needed for accountability and transparency in the financial issues attached to the NGOs and their projects.
The Act aims to consolidate several programs that allowed NGOs to protect fundamental rights, the environment, and public health based on task orientation and the interests of the general public.
-Article written by Swathi Satish