Foreign Contribution (Regulation) Act (FCRA) and NGO

In News

Recently, the Ministry of Home Affairs has cancelled the Foreign Contribution (Regulation) Act (FCRA) licence of Rajiv Gandhi Foundation (RGF) and Rajiv Gandhi Charitable Trust (RGCT).

• These organisations are associated with the Nehru-Gandhi family, for alleged violations of the provisions of the Act.

Foreign Contribution (Regulation) Act (FCRA)

• Aim: 
  • To regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and 
  • To prohibit such acceptance and utilisation for any activities detrimental to the national interest.
• Origin: 
  • The law was enacted during the Emergency in 1976 amid apprehension that foreign powers were interfering in India’s affairs by pumping in funds through independent organisations. 
  • These concerns had been expressed in Parliament as early as in 1969. 
• Function: 
  • 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.
• Amendment: 
  • An amended FCRA was enacted under the UPA government in 2010. 
  • 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. 
  • A legal challenge to the 2020 amendments was rejected by the Supreme Court in April this year.
• Provisions of the Act:
  • Every person or NGO wishing to receive foreign donations to be registered under the Act, 
  • To open a bank account for the receipt of the foreign funds in State Bank of India, Delhi.
  • 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 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.
• Registration under FCRA:
  • NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation. 
  • The registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
  • Post application, the MHA makes inquiries through the Intelligence Bureau into the antecedents of the applicant, and accordingly processes the application. 
  • The MHA is required to approve or reject the application within 90 days — failing which it is expected to inform the NGO of the reasons for the same.
• Validity and Renewal: 
  • Once granted, FCRA registration is valid for five years. 
  • NGOs are expected to apply for renewal within six months of the date of expiry of registration. In case of failure to apply for renewal, the registration is deemed to have expired.
• Cancellation of approval:
  • 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 for a range of reasons:
    • If in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate. 
  • Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years. 
  • All orders of the government can be challenged in the High Court.

New guidelines to banks on Foreign Contribution (Regulation) Act rules

• State Bank of India’s New Delhi branch: A new provision that makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the State Bank of India’s New Delhi branch was inserted.
• Designated FCRA account: All NGOs seeking foreign donations have to open a designated FCRA account at the SBI branch.
  • The NGOs can retain their existing FCRA account in any other bank but it will have to be mandatorily linked to the SBI branch in New Delhi.
• Only banking channels allowed: Foreign contribution has to be received only through banking channels and it has to be accounted for in the manner prescribed.
• OCI or PIO: Donations are given in Indian rupees by any foreign source including foreigners of Indian origin like OCI or PIO cardholders” should also be treated as foreign contributions.
• Sovereignty and integrity: It requires NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.

Major Criticisms

• Unnecessary International Criticism:
  • Significantly all the NGOs on the latest list work on climate change and environmental projects and/or child rights and slavery projects.
  • These are the subjects where the government has been sensitive to international criticism.
• International Pressure regarding Law Making and over-compliance:
  • Despite India’s record in complying with the Paris agreement, global pressures are intensifying on India to raise the Nationally Determined Contributions.
  • It is detrimental to the Indian image and poverty reduction plans.
• NGOs involved in violation of FCRA:
  • Several pro­climate NGOs are focusing on advocacy against coal in the media.
  • It is considered a violation of FCRA provisions. 
• Biassed data and poor ranking on several Indices:
  • In 2017, the International Labour Organisation’s Global Slavery Index ranked India 53rd of 167 countries where 
    • “modern slavery” was prevalent, and 
    • as the country with the highest number of people in forced labour.
  • MHA questioned the credibility of the data.
• Internal Security:
  • 3 US non-governmental organisations were found to be fuelling protests at the Kudankulam Nuclear Project Site after strained Indo-US relations.
• Fraught issue for several years:
  • FCRA clearances have been a fraught issue for several years, and the government has often been accused of targeting NGOs for political or ideological reasons by cancelling or not renewing their clearances.

How else can one receive foreign funding?

• Prior permission: The other way to receive foreign contributions is by applying for prior permission.
  • A letter of commitment from the foreign donor specifying the amount and purpose is also required.
• Specific activities or projects: It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects.
• Registration: The association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956.

Source: IE