Foreign Contribution
(Regulation) Act (FCRA)
Why in NEWS?
Centre suspended the Foreign Contribution Regulation Act (FCRA) license of the Centre for
Policy Research (CPR). This came five months after the Income Tax
department conducted ‘surveys’ on the
premises of the CPR,
Oxfam India, and the Independent and Public Spirited Media Foundation (IPSMF),
which funds a range of digital media entities. License was suspended following
prima facie inputs regarding the violation of funding norms.
What is CPR?
Recognized as a
not-for-profit society by the Government of India and contributions to the
Centre are tax exempt. CPR receives grants from the Indian Council for Social
Science Research (ICSSR), and is a Department of Science and Technology (DST) recognized
institution. CPR receives grants from a variety of domestic and international
sources, including foundations, corporate philanthropy, governments, and
multilateral agencies.
What is FCRA?
·
FCRA was enacted during the Emergency in
1976 amid apprehensions that foreign powers were interfering in India’s
affairs by pumping money into the country through independent organisations.
These concerns were expressed in Parliament as early as in 1969.
·
The law sought to regulate foreign
donations to individuals and associations so that they functioned “in a
manner consistent with the values of a sovereign democratic republic”.
·
An amended FCRA was enacted under the UPA
government in 2010 to “consolidate the law” on utilisation of foreign
funds, and “to prohibit” their use for “any activities detrimental to national
interest”.
·
The law was amended again by the current
government in 2020, giving the government tighter control and scrutiny over
the receipt and utilisation of foreign funds by NGOs.
·
FCRA requires every person or NGO seeking to
receive foreign donations to be
(i)
Registered under the Act
(ii)
To
open a bank account for the receipt of the foreign funds in State Bank of
India, Delhi, and
(iii)
To utilise those funds only for the purpose
for which they have been received and as stipulated in the Act.
·
They are also required to file annual
returns, and they must not transfer the funds to another NGO.
·
The Act prohibits the receipt of foreign
funds by candidates for elections, journalists or newspaper and media broadcast
companies, judges and government servants, members of legislature and political
parties or their office-bearers, and organisations of a political nature.
What are the new changes?
ü MHA
effected changes to FCRA rules through two gazette notifications and increased
the number of compoundable offences under the Act from 7 to 12. The other key
changes were exemption from intimation to the government for contributions less
than Rs 10 lakh – the earlier limit was Rs 1 lakh — received from relatives
abroad, and increase in time limit for intimation of opening of bank accounts.
ü Under the
new rules, political parties, legislature members, election candidates, judges,
government servants, journalists and media houses among others – all barred
from receiving foreign contribution – will no longer be prosecuted if they
receive foreign contribution from relatives abroad and fail to intimate the
government within 90 days. However, the recipient will be required to pay 5% of
the foreign contribution received.
How is FCRA registration granted?
·
NGOs that want to receive foreign funds must apply online
in a prescribed format with the required documentation. FCRA registrations are
granted to individuals or associations that have definite cultural, economic,
educational, religious, and social programmes.
·
Following the application by the NGO, the MHA makes
inquiries through the Intelligence Bureau into the antecedents of the
applicant, and accordingly processes the application.
·
Under the FCRA, the applicant should not be fictitious or
benami; and should not have been prosecuted or convicted for indulging in
activities aimed at conversion through inducement or force, either directly or
indirectly, from one religious faith to another.
·
The applicant should also not have been prosecuted for or
convicted of creating communal tension or disharmony; should not have been
found guilty of diversion or misutilisation of funds; and should not be engaged
or likely to be engaged in the propagation of sedition.
·
The MHA is required to approve or reject the
application within 90 days. In case of failure to process the application
in the given time, the MHA is expected to inform the NGO of the reasons for the
same.
·
Once granted, FCRA registration is valid for five years.
On what basis is approval cancelled?
·
The government reserves the right to cancel
the FCRA registration of any NGO if it finds it to be in violation of the Act.
·
Registration can be cancelled if an inquiry
finds a false statement in the application; if the NGO is found to have
violated any of the terms and conditions of the certificate or renewal; if it
has not been engaged in any reasonable activity in its chosen field for the
benefit of society for two consecutive years; or if it has become defunct.
·
It can also be cancelled if “in the opinion
of the Central Government, it is necessary in the public interest to cancel the
certificate,” the FCRA says.
·
Registrations are also cancelled when an
audit finds irregularities in the finances of an NGO in terms of misutilisation
of foreign funds.
·
According to FCRA, no order of cancellation
of certificate can be made unless the person or NGO concerned has been given a
reasonable opportunity of being heard. Once the registration of an NGO is
cancelled, it is not eligible for re-registration for three years.
·
The ministry also has powers to suspend an
NGO’s registration for 180 days pending inquiry, and can freeze its funds.
·
All orders of the government can be challenged in the High Court.
Source: Indian Express