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• However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds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.