Context: License of some NGOs under the Foreign Contribution Regulation Act (FCRA) has been suspended by the Union Home Ministry.
- Any NGO or association that intends to receive foreign funds has to compulsorily register under the Foreign Contribution Regulation Act (FCRA), monitored by the Ministry of Home Affairs (MHA).
- According to the 2010 Act, registered NGOs can receive foreign contribution for five purposes — social, educational, religious, economic and cultural.
- The Home Ministry also amended the Foreign Contribution (Regulation) Rules, 2011 in September 2019 that all the members and office bearers of an NGO will have to file an affidavit making it mandatory for it to report “any violation” of the FCRA provisions by the applicant organisation.
The Foreign Contribution (Regulation) Act, 2010
- It extends to the whole of India, and it shall also apply to—
- (a) citizens of India outside India; and
- (b) associate branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India.
- Every person who has been granted a certificate or given prior permission shall receive foreign contribution in a single account only through such one of the branches of a bank.
- No funds other than foreign contribution shall be received or deposited in such account or accounts.
- However, such person may open one or more accounts in one or more banks for utilising the foreign contribution received by him.
Who can accept Foreign Contribution?
- Organizations working for definite cultural, social, economic, educational or religious programs can accept foreign contribution but first, they’ve to get permission from the Ministry of Home Affairs.
- They also have to maintain a separate account book listing the donation received from foreigners and get it audited by a Chartered Accountant and submit it to Home Ministry every year.
Prohibition to accept foreign contribution.
- No foreign contribution shall be accepted by any—
- (a) candidate for election;
- (b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
- (c) Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;
- (d) member of any Legislature;
- (e) political party or office-bearer thereof (this provision has been amended);
- (f) organisation of a political nature;
- (g) association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode.
- No person who receives foreign contribution as per provisions of this Act, shall transfer to other person unless that person is also authorized to receive foreign contribution as per rules made by the Central Government.
- Foreign contribution shall be utilized for the purpose for which it has been received and such contribution can be used for administrative expenses up to 50% of such contribution received in a financial year.
- However, administrative expenses exceeding fifty per cent of the contribution to be defrayed with the prior approval of the Central Government.
Why is FCRN Act in news in the recent past?
- The government has amended (retrospectively) the FCRA, allowing foreign-origin companies to finance non-governmental organisations and thus political parties by changing the definition of “foreign companies”.
- Political parties in India can receive political donations from Indians living abroad as well as foreign companies with subsidiaries in India.
- Any foreign company can donate any amount of money to Indian political parties through their subsidiaries in India by purchasing electoral bonds.
- Electoral bonds are promissory notes that can be encashed by a registered political party through a designated bank account.
- Bonds would allow anonymous, digital donations to parties.