In news:

• The Ministry of Home Affairs (MHA) has asked all NGOs seeking foreign donations to open a designated FCRA account at the State Bank of India’s New Delhi branch.

What is the FCRA?

• The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
• First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations.
• The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
• The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

 

What happens once registered?

• Registered associations can receive a foreign contribution for social, educational, religious, economic and cultural purposes.
• Filing of annual returns, on the lines of Income Tax, is compulsory.
• In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds.
• It ruled that it is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.
• It also said 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.

 

Who cannot receive foreign donations?

• Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
• However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

 

How else can receive foreign funding?

• The other way to receive foreign contributions is by applying for prior permission.
• It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects.
• But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956.
• A letter of commitment from the foreign donor specifying the amount and purpose is also required.

 

When is  a registration suspended or cancelled?

• The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
• Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without the permission of the MHA.
• The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.

 

Who can accept Foreign Contribution?

• A person having a definite cultural, economic, educational, religious or social programme can accept foreign contribution after getting registration or prior permission from the Central Government.

 

Who cannot accept Foreign Contribution?

1. Election candidate
2. Member of any legislature (MP and MLAs)
3. Political party or office bearer thereof
4. Organization of a political nature
5. Correspondent, columnist, cartoonist, editor, owner, printer or publishers of a registered Newspaper.
6. Judge, government servant or employee of any corporation or any other body controlled on owned by the Government.
7. Association or company engaged in the production or broadcast of audio news, audio visual news or current affairs programmes through any electronic mode
8. Any other individuals or associations who have been specifically prohibited by the Central Government

 

What is the eligibility criteria for grant of registration?

The Association:

• must be registered (under the Societies Registration Act, 1860 or Indian Trusts Act 1882 or section 8 of Companies Act, 2013 etc.)
• normally be in existence for at least 3 years.
• has undertaken reasonable activity in its field for the benefit of the society.
• Has spent at least Rs.10,00,000/- (Rs. ten lakh) over the last three years on its activities.

 

What is ‘public interest’?

• The FCRA regulates the receipt of funding from sources outside of India to NGOs working in India.
• It prohibits receipt of foreign contribution “for any activities detrimental to the national interest”. 
• The Act specifies that NGOs require the government’s permission to receive funding from abroad.
• The government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state”.

 

Foreign Contribution (Regulation) Act (FCRA), 2010

• Foreign funding of voluntary organizations in India is regulated under FCRA act and is implemented by the Ministry of Home Affairs.
• The Acts ensures that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained.
• Under the Act, organisations require to register themselves every five years.

 

 

Premises for the FCRA

• Government of India enacted the Foreign Contribution (Regulation) Act (FCRA) in the year 1976 with an objective of regulating the acceptance and utilization of foreign contribution.
• Any association, non-government organisation (NGO) or registered society requires FCRA registration to receive foreign donations for specified purposes.
• The act was majorly modified in 2010 with several amendments because many NGOs were found using illegal use of foreign funding.

 

Foreign Contribution (Regulation) Amendment Bill, 2020

• Provisions of the Bill:
   
• Prohibition to accept foreign contribution: The Bill bars public servants from receiving foreign contributions.
   
  • Public servant includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.
  • The FCRA 2010 also bars certain persons to accept any foreign contribution. These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
  • Transfer of foreign contribution: The Bill prohibits the transfer of foreign contribution to any other person.
     
    • The term ‘person’ under the Bill includes an individual, an association, or a registered company.
    • The FCRA 2010 allows transfer of foreign contributions to persons registered to accept foreign contributions.
  • Aadhaar for registration: The Bill makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
     
    • In case of a foreigner, a copy of the passport or the  Oveaseas citizens of India card for identification is required.
  • FCRA account: The Bill states that foreign contribution must be received only in an account designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi. No funds other than the foreign contribution should be received or deposited in this account.
     
    • The person may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.
  • Restriction in utilisation of foreign contribution: The Bill allows the government to restrict usage of unutilised foreign contribution. This may be done if, based on an inquiry the government believes that such person has contravened provisions of the FCRA.
  • Reduction in use of foreign contribution for administrative purposes: The Bill proposes that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. In FCRA 2010 the limit was 50%.
  • Surrender of certificate: The Bill allows the central government to permit a person to surrender their registration certificate.
     
    • The government may do so if, post an inquiry, it is satisfied that such person has not violated any provisions of the FCRA 2010, and the management of its foreign contribution has been vested in an authority prescribed by the government.
• Purpose for Amendment:
   
  • The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.
     
    • Recently, the Union Home Ministry has suspended licenses of the six (NGOs)  who were alleged to have used foreign contributions for religious conversion.
  • Many persons were not adhering to statutory compliances such as submission of annual returns and maintenance of proper accounts.
  • Such a situation could have adversely affected the internal security of the country.
  • The new Bill aims to enhance transparency and accountability in the receipt and utilisation of foreign contributions and facilitating the genuine non-governmental organisations or associations who are working for the welfare of society.
• Issues Involved
   
  • The Bill would impact the livelihoods of workers associated with the small Non- Governmental Organisations  (NGOs) and lead to the killing of the entire social sector as caps on administrative expenses would make it impossible for even the bigger NGOs to perform.
  • It will severely impact collaborative research in critical fields in India as organisations receiving foreign funds will no longer be able to transfer them to small NGOs working at the grassroots level.
  • The government aims to control the NGOs which engage in dubious activities. However, by failing to recognise the diversity of NGOs, which include world-class organisations that are recognised globally, will crush their competitiveness and creativity.
  • It is also incompatible with international law.
     
    • The United Nations Human Rights Council resolution on protecting human rights defenders says that no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding.
    • The Bill also fails to comply with India’s international legal obligations and constitutional provisions to respect and protect the rights to freedom of association, expression, and freedom of assembly.
  • The amendments also assume that NGOs that are receiving foreign funds are guilty unless proven otherwise.