Foreign Contribution Regulation Act

Why in news?

• The Government has told the Supreme Court that NGOs have no fundamental right to receive “unbridled foreign contributions” without regulations.
• The Centre was responding to petitions challenging amendments made in the Foreign Contributions Regulations law in 2020.
• The petitions had argued that the amendments severely restricted the use of foreign funds by the NGOs for their activities and their transfer.

About Foreign Contribution Regulation Act, 2010:

• Objective:
  • It was enacted to ensure that foreign contribution is utilized for genuine activities without compromising on concerns for National Security. It replaced the Foreign Contribution (Regulation) Act 1976.
  • “Foreign Contribution” is defined by FCRA as a donation, delivery or transfer made by a foreign source of:
    • Any article, the value of which ought not to exceed Rs. 25,000.
    • Currency, foreign or Indian.
    • Foreign securities including all foreign debentures, bonds, shares, stocks and similar instruments of credit. Any income or interest generated from such contributions is also treated as a foreign contribution under the FCRA.
• Prohibition:
  • The act provides a list of individuals prohibited from accepting any type of foreign contribution, such as:
    • Candidates for election, members of any legislature, political parties or their office-bearers.
    • Cartoonists, editors, or publishers of a registered newspaper
    • Judges, government servants or employees of any public sector corporation.
    • Organisations of political nature
    • Association/group engaged in the production or broadcast of audio or audio-visual news or current affairs programmes through any electronic mode.
• Permissions:
  • Permits only NGOs having a definite cultural, economic, educational, religious or social programme to accept foreign contribution, that too with the approval of the Government of India, through the Ministry of Home Affairs.
• Registration:
  • In order to be eligible to receive the foreign contributions, an organization may seek prior approval either each time the entity is to receive contributions or by obtaining a one-time long-term registration, which is valid for a period of 5 years.
• Managing contributions:
  • Upon obtaining registration/prior permission, the organization is required to open and maintain a bank account exclusively for the receipt and utilization of foreign contributions under FCRA.
  • It is also required to submit the annual returns to the Central Government.
• Restrictions on end use:
  • The contributions must be used only for the purpose for which it is received.  Further, they must not use more than 50% of the contribution for meeting administrative expenses.
• Authority:
  • The central government has the power to prohibit any persons or organisations from accepting foreign contribution or hospitality. It can conduct separate audits for FCRA certified organisations and has the power of search and seizure.
• Punishment:
  • The MHA can cancel the registration of an organisation, making them ineligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.
  • The unutilised or unreceived foreign contribution may be utilised or received only with the prior approval of the central government.
• Exemptions:
  • Funding from the United Nations, the World Bank and the International Monetary Fund is exempt from the requirements of the act.

Amendment in 2020:

• Prohibition for public servants:
  • The amendment bars public servants from receiving FCRA funds.
• Transfer of foreign contribution:
  • Under the original Act, foreign contribution can be transferred to a person who is also registered to accept foreign contribution.  The amendment prohibit the transfer of foreign contribution to any other person.
• Aadhaar for registration: 
  • The amendment mandates that any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number.
  • 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 FCRA account in such branch of the State Bank of India, New Delhi, as notified by the central government. 
• Restriction in utilisation of foreign contribution:
  • The government may restrict usage of unutilised foreign contribution based on a summary inquiry, and pending any further inquiry. 
• Renewal of license:
  • Government may conduct an inquiry before renewing the certificate to ensure that the person making the application is not fictitious, not been prosecuted for creating communal tension or misutilisation of funds, among others conditions.
• Reduction in use of foreign contribution for administrative purposes:
  • The amendment reduces the limit to 20% from the existing 50%.
• Surrender of certificate:
  • Central government can permit a person to surrender their registration certificate, if such persons have not contravened any provisions of the Act, and the management of its foreign contribution has been vested in an authority prescribed by the government.
• Suspension of registration:
  • Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days.  The Bill adds that such suspension may be extended up to an additional 180 days.

PRACTICE QUESTION:

Which of the following country is/are correct regarding ‘Foreign Contribution Regulation Act’?

1. Under the Act, Political parties are prohibited from accepting any type of foreign contribution.

2. Ministry of Home Affairs can cancel the registration of an organisation, making them ineligible to receive the foreign contributions.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer