What is FCRA
Foreign Contribution Regulation Act, 2010 or FCRA is a law of government of India which regulates receipt of foreign contributions or aid from outside India to Indian territories. This is essential to ensure that such aid does not affect political or any other situation in India. For genuine donation, the provision of law is not very difficult to comply. The regular compliance is limited to filing of annual return every year. This law is enforced by the ministry of Home affairs, Government of India. There is a separate section in the ministry to ensure compliance to the Foreign Funding Registration.
FCRA 1976:
On 31st March 1976, FCRA was enacted with an aim to regulate the
utilization of foreign contributions/hospitality by individuals, associations to keep it consistent with the values of sovereign, democratic republic. The FCRA was enacted in 1976 in order to maintain strict control over voluntary organisations and political associations that received foreign funding. In the year 1984, an amendment was made to the act requiring all the Non Governmental Organisations (NGO) to register themselves with the Home Ministry. In 2010, the act was repealed and a new act with strict provisions was enacted.
FCRA 2010:
FCRA 2010 is a consolidating Act passed by the Government of India in the
year 2010. It seeks to regulate the foreign contributions or donations and hospitality air travel, hotel accommodation etc) to Indian organizations and individuals and to stop such contributions which might damage the national interest. It is an act passed for regulating and prohibiting the acceptance and utilization of foreign contribution or foreign hospitality by companies, associations or individuals for such activities that could prove to be detrimental to the national interest and for matters connected
therewith or incidental thereto. Since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the purview of Home Ministry and not the Reserve Bank of India (RBI).
Objective of FCRA:-
- The main objective of the Act is to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest, national integrity and national safety.
- Ministry of Home Affairs is responsible for the implementation of FCRA so that Sovereignty, Democracy and Republican Nature of the Indian Government is preserved.
- The acceptance and utilization of foreign contribution is monitored by the Government and action is taken in the case of violations of the Act.
Major ingredients of FCRA:-
Who can accept Foreign Contribution?
Organizations working for definite cultural, social, economic, educational or religious programs, if and only if they are
- Registered with the Home Ministry
- Maintaining a separate account listing the donations received from foreigners, getting it audited by a Chartered Accountant and submitting it to the Home Ministry, every year.
Who are debarred from receiving Foreign Contribution?
- Candidate contesting an election
- Cartoonist, editor, publishers of registered newspaper
- Judge
- Government servants or employee of any corporation
- Member of any legislature
- Political parties
Applicability:-
It extends to whole of India, and also applies to
a. Citizens of India who are outside India.
b. Associate branches or subsidiaries, outside India, of companies or bodies
corporate, registered or incorporated in India.
Foreign Contribution:-
FC means donation, delivery, or transfer made by any foreign source of:–
a. Any article other than personal gifts of market value not exceeding such sum as may be specified by the Central Government.
b. Any currency whether Indian or foreign.
c. Any security including foreign security.
This will also cover contribution received from any person who has in turn received it from a foreign source and also interest accrued on FC deposited in the bank.
However, any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of business, trade or commerce, whether within India or outside India, shall be excluded from the definition of foreign contribution.
Foreign Source:-
It includes:–
a. Government of any foreign country or any agency of such government;
b. Any international agency except United Nations or any of its specialised
agencies, World Bank, International Monetary Fund or such other agency as
the Central Government may, by notification in the Official Gazette, specify;
c. Foreign company;
d. Corporation, other than foreign company, incorporated outside India;
e. A multinational corporation;
f. A company where more than 50% of its share capital is held by a foreign
government or citizens of a foreign country or foreign entity (includes
company, corporations, trusts, societies or other associations of individuals
registered in foreign country);
g. A foreign trust or foreign foundation and includes trust or foundation mainly financed by a foreign country and;
h. Citizen of a foreign country.
i. Foreign Trade Union, Society, Club or Other Association.
Amount received from a non-resident Indian citizen in foreign currency, would not be treated as foreign source.
Restrictions on Accepting FC
The person having a definite cultural, economic, educational, religious or social programme can accept FC, only if:
a. It is registered with the Central Government under this Act or takes prior
permission before receiving each contribution.
b. It receives FC only through one designated bank account.
c. Central Government is kept intimated as to the amount, source and manner in which FC was received and utilised.
Prior Permission
a. Application for prior approval to be made in Form FC 4.
b. Prior approval to be donor specific, donee specific and purpose specific.
Eligibility criteria for grant of registration:-
The Association must be registered (under the Societies Registration Act, 1860 or Indian Trusts Act 1882 or section 8 of Companies Act, 2013 etc.)
- Normally be in existence for at least 3 years.
- Has undertaken reasonable activity in its field for the benefit of the society.
- Has spent at least Rs.10,00,000/- (Rs. ten lakh) over the last three years on its activities.
The Ministry of Affairs has introduced a new facility “FCRA – Online” to facilitate associations to file their applications for registration and submit statutory forms online.
Restriction on Administrative Expenses and Speculative Activity
Every person, registered or having prior permission, shall not, as far as possible, incur administrative expenses in excess of 50% of the FC received in that financial year. Foreign contribution or any income arising out of it shall not be used for speculative business.
Transfer of FC to Other Registered or Unregistered Persons
a. Transfer of FC funds to another person who is not registered or has not
obtained prior permission to receive foreign contribution will not be permitted unless pre-approval of the Central Government is obtained. Application for such pre-approval is to be made in Form FC 10.
b. In such case, the transferor may apply for permission to transfer not more than 10% of the total value of FC received.
c. Transfer of FC funds is permitted if the transferee is a registered organisation or has obtained prior permission under section 11.
Inspection & Seizure
a. The Central Government has been empowered, to inspect as well as seize
the accounts and records if it has reason to believe that any provisions of this Act or any other law relating to foreign exchange has been contravened.
b. Central Government may seize and/or confiscate any article, currency or
security in relation to which any provision of this Act has been contravened.
c. The seized records and accounts are to be released if no proceedings are
initiated within six months from the date of seizure.
Custody of FC when certificate of registration is cancelled
- If certificate of registration is cancelled then unutilised FC lying in thedesignated bank account shall vest with concerned banking authority till Central Government issues further direction.
- If person to whom the certificate is granted ceases to exist or becomes defunct then, the assets of such person shall be disposed of in accordance with the provisions of law for the time being in force under which the person was registered or incorporated.
FC in Excess of Rupees One Crore in a Financial Year
Any person in receipt of FC in excess of ₹ one crore in a financial year, shall
maintain summary data of receipts and utilisation of FC pertaining to the year of receipt and the subsequent year in the public domain. The Central Government shall also display such summary data through its website.
HOW FCRA WAS USED, ABUSED AND MISUSED:-
FCRA has been turned into an instrument of repression, one that the government has used to cut off vital funding to groups that may hold positions contrary to the government’s own. By extension, the granting and cancelling of FCRA registration has become grist for the media mill, leaving many organisations including Greenpeace, battling false perceptions and responding to allegations of being ‘anti- national’ and ‘anti-development’ instead of being able to focus on our constructive campaigns for clean air, safe food and a healthy environment.”
In 2014, the Delhi High Court indicted both the Bhartiya Janata Party (BJP) as well as the Congress of receiving foreign funds in violation of provisions of Foreign Contribution (Regulation) Act (FCRA). The verdict came after public interest litigation
(PIL) was filed by the Association for Democratic Reforms. A division bench
comprising Justice Pradeep Nandrajog and justice Jayant Nath asked the
government and the Election Commission (EC) to act against the two political parties for accepting foreign funds from Vedanta subsidiaries.
The question, at this juncture, is why is the government apprehensive of NGOs whose work is to democratically interrogate so that constitutional rights and freedoms are not violated. Another question is whether the FCRA is indeed a tool of repression as civil society organisations have declared?
In April 2015, a legal analysis was developed by the UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association.
It stated that FCRA norms and regulations “are not in conformity with international law, principles and standards”. The FCRA violates the right to freedom of association, an integral freedom incorporated within the International Covenant on Civil and Political Rights, to which India is a party.
The right, though not absolute, are amenable to reasonable restriction; however, the analysis suggests that restrictions such as “public interest” and “economic interest” invoked under the FCRA cannot be termed as legitimate restrictions as they are too ambiguous and may give rise to arbitrary and discretionary powers.
The Foreign Contribution (Regulation) Amendment Bill 2020
The Foreign Contribution (Regulation) Amendment Bill 2020 has been
introduced in the Lok Sabha on 20th September 2020. The Bill proposes a number of drastic changes to the law governing receipt of foreign contributions and which will have an impact on charitable institutions in India.
The objective of the Bill:
a. To regulate non-governmental organisations by making them accountable and transparent.
b. To regulate religious conversions supported by foreign funds.
c. To broaden the definition of the “government servant” category to include “public servants” among the people who cannot receive foreign funds.
Key Changes:
(1) 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. Public servants include any person who is in service or pay of the government or remunerated by the government for the performance of any public duty.
(2) 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).
The Bill amends this to prohibit the transfer of foreign contribution to any other person. The term ‘person’ under the Act includes an individual, an association, or a registered company.
(3) Aadhaar for registration:
The Bill makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
In case of a foreigner, a copy of the passport or the Overseas Citizen of India card for identification is required.
(4) FCRA account:
The Bill states that foreign contribution must be received only in an account
designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi. No funds other than the foreign contribution should be received or deposited in this account.
The person may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.
(5) Restriction in the utilization of foreign contribution:
The Bill allows the government to restrict usage of unutilised foreign contribution. This may be done if, based on an inquiry the government believes that such person has contravened provisions of the FCRA
.
(6) 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 and (iii) has not been found guilty of diversion or misutilisation of funds, among others conditions.
(7) Reduction in use of foreign contribution for administrative purposes:
The Bill proposes that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. In FCRA 2010 the limit was 50%.
(8) Surrender of certificate:
The Bill adds a provision allowing the central government to permit a person to surrender thir registration certificate.
The government may do so if, post an inquiry, it is satisfied that such person has not contravened any provisions of the Act, and the management of its foreign contribution (and related assets) has been vested in an authority prescribed by the government.
(9) 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.
Conclusion:
NGOs are helpful in implementing government schemes at the grassroots. They fill the gaps, where the government fails to do their jobs or where government job is not sufficient.
The government must stick to the ancient Indian ethos of Vasudhaiva Kutumbakam as the framework for its global engagement and should not act with vendetta against the NGOs who criticize its working.
Seamless sharing of ideas and resources across national boundaries is essential to the functioning of a global community, and should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities. Govt. should judicially use its policy. FCRA should be used to bring transparency and accountability in foreign contribution and including in the working of NGO’s but not against NGOs.
Excellent social work being done by a social worker and politician Rakesh Singh an advocate also during lock down covid 19
All the best wishes.
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