NGOs vs. GoI: The Conflicts and Scrutinies

Foreign Contribution (Regulation) Act (FCRA)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : FCRA

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  • However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds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