Why in the News?
The Ministry of Home Affairs (MHA) has instructed NGOs to submit their Foreign Contribution (Regulation) Act (FCRA), 2010 renewal applications at least four months before expiry.
About the Foreign Contribution (Regulation) Act (FCRA):
- Origin: First enacted in 1976 during the Emergency to regulate inflow of foreign funds.
- FCRA, 2010: Replaced the 1976 Act to strengthen regulation and ensure foreign funds are used for legitimate purposes without compromising sovereignty, security, or national interest.
- Coverage: Applies to individuals, associations, and organizations receiving foreign contributions.
- Administration: Managed by the Ministry of Home Affairs.
- Objectives:
- Ensure foreign funds are used responsibly.
- Prevent undue foreign influence on Indian politics, civil society, and governance.
- Safeguard sovereignty, integrity, and harmony.
Key Provisions of FCRA, 2010:
- Registration: Only organizations with definite cultural, social, economic, educational, or religious objectives can apply.
- Validity: Registration valid for 5 years; renewal required 6 months before expiry.
- Designated Bank Account: NGOs must open an exclusive FCRA account in SBI, New Delhi.
- Annual Reporting:
- Receipts and utilization must be reported annually.
- Accounts must be audited by a Chartered Accountant.
- Banks must report foreign fund receipts to MHA.
- Administrative Expenses: NGOs can use a maximum of 20% of foreign funds for admin costs (earlier 50%).
- Special Provisions:
- NGOs can spend up to ₹25 lakh annually outside their constituency/state for projects promoting national unity.
- In severe natural calamities, MPs/NGOs may allocate up to ₹1 crore for relief anywhere in India.
- Prohibited Recipients: Foreign funds cannot go to election candidates, journalists, media houses, judges, government servants, political parties or office bearers, or organizations of political nature.
- Prohibited Activities: NGOs cannot:
- Represent fictitious entities.
- Engage in religious conversions.
- Have records of communal tension, disharmony, or sedition.
Amendments to FCRA:
FCRA Amendment Act, 2020
- Suspension: Government can suspend registration for up to 360 days.
- Mandatory Aadhaar: All office bearers, directors, and key functionaries must provide Aadhaar.
- Prohibition on Sub-Granting: NGOs cannot transfer foreign contributions to other NGOs/entities.
- Reduced Admin Cap: Admin expenses limited to 20% (earlier 50%).
- Designated SBI Account: All foreign funds must be received only in an FCRA account at SBI, New Delhi.
- Bar on Public Servants: Public servants prohibited from receiving foreign contributions.
- Renewal Scrutiny: Renewal applications can be examined for misuse, fictitious status, or rule violations.
- Surrender of Certificate: NGOs can surrender registration with government approval.
FCRA Rules, 2022:
- Raised the annual limit for money received from relatives abroad to ₹10 lakh (earlier ₹1 lakh) without notifying MHA.
- Strengthened safeguards against harmful foreign contributions.
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