JPC members question Centre on FCRA Bill’s asset takeover provisions

Why in the News

Parliament’s Joint Committee on the Foreign Contribution (Regulation) Amendment Bill, 2026 questioned the Centre on the Bill’s asset takeover provisions at its first meeting. The provision at issue vests foreign contributions and all assets created from them in a government appointed “designated authority” when an organisation’s Foreign Contribution (Regulation) Act (FCRA) certificate is cancelled, surrendered, or lapses automatically, without a prior hearing or a judicial determination. The Union Home Ministry defended the change as making the use of foreign contributions more transparent and accountable, and said a “prescribed authority” already exists under the present law. The tension is between an administrative gap the Ministry says it is closing and the constitutional bar on deprivation of property without due process. Opposition members of the Committee invoked Article 300A of the Constitution against the provision.

What does the “designated authority” provision do?

1. When it is triggered: It operates on three events, cancellation of an organisation’s FCRA certificate, its surrender by the organisation, and its automatic lapse.
2. What vests: Foreign contributions already received and every asset created out of them pass to a government appointed designated authority.
3. What it dispenses with: The vesting takes effect without a prior hearing for the organisation and without a judicial determination that the assets should pass.
4. How wide the power is: The authority is to hold powers of a wide ambit over those assets, which is the specific feature the Committee’s members contested.

What is the Ministry’s stated rationale for the change?

1. A custodian already exists in law: The present Act provides for a “prescribed authority”, identified by a notification of 5 November 2018 as the Additional Chief Secretary or Principal Secretary (Home) of the State or Union Territory concerned.
2. The custodian cannot act: There is no deadline on that custodianship under the current law, which leaves the prescribed authority a “passive custodian” unable to take substantive decisions on assets.
3. No procedure for the handover: The law lays down no standard procedure for taking possession of such assets, maintaining inventories, or separating foreign contribution assets from domestically funded ones.
4. The cost of open ended custody: Prolonged custodianship leaves States facing budgetary and manpower constraints in running vested institutions such as schools, hospitals and orphanages.
5. Two silences in the existing law: The Act says nothing on the final disposal of vested assets and nothing on the treatment of places of worship.

On what constitutional ground is the provision contested?

1. The provision relied on: Opposition members of the Committee argued that deprivation of property cannot be permitted without a prior hearing, relying on Article 300A of the Constitution.
2. What Article 300A guarantees: It states that no person shall be deprived of property save by authority of law, so a taking requires a valid law and a fair procedure even though property is no longer a fundamental right.
3. Why automatic vesting is the pressure point: Cancellation, surrender and lapse are administrative events, so tying the transfer of assets to them removes any stage at which the organisation is heard before it loses them.
4. What it leaves unsettled: The Ministry’s own submission records that the law is silent on final disposal, so an organisation whose certificate later stands restored has no stated route back to its assets.

Why did the Ministry’s presentation on religious groups draw objection?

1. What the presentation contained: It catalogued foreign contributions received by different religious groups and highlighted that a majority of the funds went to Christian organisations.
2. The objection raised: Members questioned the rationale for segregating contributions received under religious heads at all.
3. Why the classification matters: A regulatory case built on the religious identity of recipients shifts the test from how funds were used to who received them.

Why is the FCRA framed as a national security law?

1. The Ministry’s characterisation: The Home Ministry told the Committee that the latest amendment is at its core a “national security” legislation.
2. The origin of the statute: The FCRA was enacted in 1976, amid Cold War era mistrust of Western influence and concern over threats to India’s sovereignty and democratic institutions.
3. What preceded it: Before 1976, non governmental organisations receiving foreign funds operated under general laws such as the Societies Registration Act, the Trusts Act and the Companies Act.
4. The gap it filled: Those general laws carried no centralised mechanism to monitor foreign contributions, which is the function the FCRA introduced.

Challenges to the FCRA regulatory framework

1. Sanction without a judicial stage: Cancellation, and now the vesting of assets, follow executive determination, so an organisation contests the outcome after it has already taken effect. Eg. The vesting under the Bill operates with no prior hearing and no judicial determination.
   The Fix: Require a reasoned show cause order and a hearing before vesting, with the transfer suspended until an appellate forum has ruled.
2. Suspension operates as a penalty on its own: A certificate suspended pending inquiry stops foreign funds immediately, so service delivery halts before any finding is recorded. Eg. Registration of the Centre for Policy Research was cancelled in 2024 after a prolonged suspension, ending its foreign funded research programmes.
   The Fix: Cap the suspension period in the statute and require the inquiry to conclude within it or the certificate to revive automatically.
3. Compliance costs fall hardest on small organisations: Annual returns, a designated single bank account and renewal every five years require dedicated staff that a small grassroots body does not have. Eg. The 2020 amendment required every recipient to route foreign funds through a designated account at a single branch of the State Bank of India in New Delhi.
   The Fix: Set a simplified filing track and a longer renewal cycle for organisations below a stated annual receipt threshold.
4. A ban on transfers breaks the funding chain: Prohibiting an FCRA holder from passing funds to another organisation cuts off smaller field level bodies that never receive foreign money directly. Eg. The Foreign Contribution (Regulation) Amendment Act, 2020 barred transfer of foreign contribution to any other person, including another FCRA registered body.
   The Fix: Permit onward transfer to a registered recipient with reporting of the transfer, so the audit trail is preserved without ending sub granting.
5. Regulatory reach shapes advocacy as much as accounting: Where funding status turns on administrative discretion, an organisation adjusts its public positions to protect its registration. Eg. The Supreme Court upheld the 2020 amendments in Noel Harper v. Union of India (2022), holding that no organisation has a vested right to receive foreign contribution.
   The Fix: Publish the grounds and the evidentiary standard for every cancellation, so refusal is testable against a stated rule rather than inferred.

Conclusion

The Bill is at the start of committee scrutiny and the disagreement is already about process rather than purpose. Both sides accept that custody of assets after a certificate ends is currently unregulated, and they differ on whether the answer is an authority that can act at once or a procedure that must be completed before it acts. The unresolved question is what happens to an organisation that succeeds on appeal after its assets have already vested, since the Ministry’s own submission records that the law is silent on final disposal. The next milestone is the Joint Committee’s examination of the Bill and the report it returns to Parliament.

Back2Basics: Foreign Contribution (Regulation) Act, 2010

1. What it replaced: It repealed and replaced the 1976 Act, and is administered by the Ministry of Home Affairs.
2. What it regulates: It governs the acceptance and utilisation of foreign contribution and foreign hospitality by persons and associations, to ensure they do not act against the national interest.
3. Registration and its renewal: An association must hold registration or prior permission to receive foreign contribution, and registration is valid for five years and renewable.
4. Who is barred outright: Election candidates, judges, government servants, members of a legislature, journalists and editors of registered newspapers, and political parties are prohibited from accepting foreign contribution.

Matching Previous Year Question

“[2015, GS2, 12] Examine critically the recent changes in the rules governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976.”