Foreign contribution regulation act

Why in News

The Tirumala Tirupati Devasthanams (TTD), the Ramakrishna Mission, and the Shri Saibaba Sansthan Trust (SSST) in Shirdi are among the 6,000 NGOs that did not have their FCRA registration renewed by the Union Home Ministry recently. 

The Tirupati Venkateswara temple in Andhra Pradesh and the Ramakrishna Mission are registered as Hindu religious organisations, while the SSST falls under the “religious (others)” category of the Foreign Contribution (Regulation) Act (FCRA). 

Registered associations can receive foreign contributions for social, educational, religious, economic, and cultural purposes. 

The FCRA registration is mandatory for receiving foreign funds.

Foreign contribution regulation act: Background

The act was first enacted on 31st March 1976 by the government of India.

The main objectives of the act were:

  1. To regulate the utilization of the foreign contributions by the individuals or associations.
  2. To ensure the safeguarding of internal security.
  3. Maintain the sovereignty of India.
  4. To maintain the strict control over the organizations and associations that were receiving foreign contributions.
Foreign contribution regulation act 2010

Enacted to regulate the foreign funding of the person or organization in India.

The contributions could be received by the individuals or organisation without the permission of Ministry of home affairs under certain conditions.

The organizations needed to register themselves every five years.

The limit for foreign contribution was set at Rs. 25000.

The home ministry had power to cancel the registration of any non-governmental organisation if according to it the organisation was political or biased.

A separate bank account essential with the government for deposit of the contributions received.

Foreign contribution (regulation) act 2020

The Act amends the Foreign Contribution (Regulation) Act, 2010. 

The Act regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. 

Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.

Significant provisions

Prohibition to accept foreign contribution:

Under the Act, certain persons are prohibited 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. 

The Bill adds public servants (as defined under the Indian Penal Code) to this list

Transfer of foreign contribution:

Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution). 

Aadhaar for registration:

Any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document. 

In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification. 

FCRA account:

Foreign contribution must be received only in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government. 

No funds other than the foreign contribution should be received or deposited in this account.

Restriction in utilisation of foreign contribution:

The government may also restrict usage of unutilised foreign contribution for persons who have been granted prior permission to receive such contribution.

Renewal of license:

Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration. 

The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:

(i) is not fictitious or benami,

(ii) has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion,

(iii) has not been found guilty of diversion or misutilisation of funds, among other conditions.

Reduction in use of foreign contribution for administrative purposes:

Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. 

Further, they must not use more than 50% of the contribution for meeting administrative expenses.  The Bill reduces this limit to 20%.

Posted by on 7th Jan 2022
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