Context- According to a submission made by a non-governmental organization in the Delhi High Court, only 16% registered NGOs have active bank accounts with the State Bank of India's main branch in Delhi, which is a compulsory requirement to receive foreign funds from April 1 under the Foreign Contribution Regulation Act (FCRA).


  • According to the amended provisions of the FCRA enacted in September 2020, the NGOs registered under the act were asked to open a designated bank account at the State Bank of India, Delhi and compulsorily register the Aadhaar details of the chief functionaries, trustees and office bearers.
  • The amendment stated that all existing FCRA accounts of the NGOs will be linked to the SBI account in Delhi, and while they may not be able to receive fresh foreign funds from April 1 in the existing accounts, they could utilise the money that already existed in the old accounts.
  • The Guwahati High Court responding to a plea by an Assam based NGO on May 5 sent a notice to the SBI asking it to explain why Aadhaar was necessary to open a bank account, when in 2018, the Supreme Court in the K.S. Puttaswamy (Aadhaar) case had ruled that mandatorily linking Aadhaar to a bank account “does not satisfy the test of proportionality”.
  • An Andhra Pradesh NGO that had moved the Delhi High Court last week seeking exemption from the March 31 deadline to open an account in Delhi, informed the court on Wednesday that out of the 22,457 NGOs with active FCRA licences, only 3,616 have active bank accounts with the SBI Main Branch, Delhi (NDMB).
  • The NGO said that despite applying before March 31, their papers were not processed.
  • However, the Ministry of Home Affairs has not commented on whether the government was considering extending the March 31 deadline.

Foreign Contribution Regulation Act (FCRA), 2010

  • In India, foreign funding of voluntary organizations is regulated under FCRA which is implemented by the Ministry of Home Affairs.
  • Under the Act, the organizations are required to register themselves every 5 years.
  • Individuals under the act are permitted to accept foreign contributions without permission of the MHA. However, the monetary limit of search contributions shall be less than rupees 25,000.
  • The Act aims to ensure that the recipients of foreign contributions are here to the stated purpose for which such contribution has been obtained.
  • Coverage- It is applicable to all associations, groups and NGOs which intend to receive foreign donations.
  • Who cannot receive the foreign donations under the Act?
    • Members of legislature and political parties, government officials, judges, and media persons.
    • However, in 2017 the act was amended to allow political parties to receive from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.
  • The registered associations can receive foreign contributions for social, educational, religious, economic, and cultural purposes.
  • The filing of annual returns on the lines of income tax is compulsory under the Act for the donations.
  • The term person under the act includes individuals, Hindu undivided families (HUF), associations and non-profit companies.

FCRA (Amendment), 2020

Key Provisions:

  • Through the amendment, the act bars public servants from receiving foreign contributions. Public servant under the act includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.
  • The act prohibits the transfer of foreign contribution to any other person who is not registered to accept the foreign contributions under the act.
  • It makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
  • It also states that foreign contributions must be received only in an account designated by the bank as FCRA account in such branches of State Bank of India, New Delhi.
  • The act also proposes that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. Previously this limit was 50%.
  • It allows the central government to permit a person to surrender their registration certificate under the act. However, it is allowed only after the government is satisfied post an enquiry that such person has not violated any provisions of the FCRA 2010 at the management of its foreign contribution has been invested in an authority prescribed by the government.
  • It also allows the government to restrict the usage of unutilised foreign contribution based on an enquiry which proves that such person has contravened the provisions of the FCRA.

Need for such amendments

  • To monitor Misuse of funds- In Parliament, the government alleged that foreign funds were being used for religious conversions. For instance, in 2017, the government barred American Christian charity, Compassion International.
  • To prevent loss to the GDP- An official report quantifying the GDP losses allegedly caused by environmental NGOs was prepared during the NPA period, indicating a foreign conspiracy against India.
  • To enhance transparency and accountability- The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act.
  • To regulate NGOs- Many persons were not adhering to statutory compliances such as submission of annual returns and maintenance of proper accounts.

Issues involved with the Amendment

  • It impacts the livelihoods of workers associated with small NGOs and can cause the killing of the entire social sector as caps on administrative expenses can make it impossible for even the bigger NGOs to perform.
  • There will be a severe impact on collaborative research and critical fields in India as organizations receiving foreign funds will no longer be able to transfer them to small NGOs working at the grassroots level.
  • The amendments are incompatible with the international laws like the UNHRC resolution on protecting human rights defenders which says that no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding.
  • It also does not comply with India's international legal obligations and constitutional provisions to respect and protect the rights to Freedom of Association, Expression and Freedom of Assembly.
  • New regulations put excessive conditions on civil society organizations, and educational and research institutions that have partnerships with foreign entities.
  • It might crush the competitiveness and creativity of world class NGOs.


Seamless sharing of ideas and resources across national boundaries is an essential condition for globalization. Seamless sharing of ideas and resources across national boundaries  should not be discouraged unless there are reasons to believe that the funds are being misused. Moreover, the government must treat the ancient Indian ethos of Vasudhaiva Kutumbakam as the framework for its global engagement and should not have vendetta against the NGOs who criticize its working, as these NGOs are extremely important in implementing the government schemes at the grassroots levels. They fill the gaps in areas where the government fails to do their jobs.

Source- The Hindu