Foreign Contribution Regulation Act

FCRA: Relevance

• GS 3: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

FCRA: Context

• Recently, Ministry of Home Affairs (MHA) has refused to renew the FCRA registration of Missionaries of Charity (MoC), an organisation set up by Mother Teresa.

What is FCRA?

• FCRA is a law of India, which regulates receipt of foreign contributions or aid from outside India to India territories.
• This Act is essential to ensure that such aid does not affect political, internal security or any other situation in India.

About FCRA

• The Act was first enacted in 1976, it was subsequently amended in 2010 and then in 2020 when a slew of new measures were adopted to regulate foreign donations.
• The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
• The Act mandates all such NGOs to register themselves under the FCRA.
• The registration is initially valid for five years and it can be renewed every five years.
• Registered associations can receive foreign contribution for social, educational, religious, economic and cultural purposes.
• Individuals are permitted to accept foreign contributions without permission of MHA. However, the monetary limit for acceptance of such foreign contributions shall be less than Rs. 25,000.

Foreign Contribution Regulation Amendment 2020: Key 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, public servants, members of any legislature, and political parties, among others.
• Transfer of foreign contribution: 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.
• Aadhar registration: The Act makes it mandatory for any person seeking prior permission, registration or renewal of registration to provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document.
• FCRA account: The Act states that 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.
• Renewal of license: The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:
  • is not fictitious or benami,
  • has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion, and
  • has not been found guilty of diversion or misutilisation of funds, among others conditions.
• Suspension of registration: Under the Act, the government may suspend the registration of a person for a period of 180 days and can be extended to additional 180 days.
• Reduction in use of foreign contribution for administrative purposes: Under the Act, a person who receives foreign contribution must not use more than 20% of the contribution for meeting administrative expenses.

FCRA 2020: Why needed?

• Foreign contributions have almost doubled between 2010 and 2019. However, many recipients have not utilised the funds in a bona fide manner.
• Many people were not adhering to the statutory compliances, thus adversely affecting the internal security of our nation.
• The Act aims to enhance the transparency and accountability in utilisation of the foreign funds.

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