FCRA
- ECONOMY
News:
‘Save The Children’ loses
its FCRA permit
What's
in the news?
● The
Ministry of Home Affairs (MHA) has withdrawn the permit under the Foreign
Contribution Regulation Act (FCRA) for U.K.-based NGO Save The Children’s
Indian offshoot, Bal Raksha Bharat.
What
is the FCRA?
● The
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.
● 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 utilization of foreign funds, and “to prohibit” their
use for “any activities detrimental to national interest”.
Registration
under FCRA:
● FCRA
registrations are granted to individuals or associations that have definite
cultural, economic, educational, religious, and social programmes.
● Under
the FCRA, the applicant
○ should not be fictitious or benami.
○ 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.
○ should 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.
○ 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.
● NGOs
are expected to apply for renewal within
six months of the date of expiry of registration.
Cancellation
of license:
● In
case of failure to apply for renewal, the registration is deemed to have
expired, and the NGO is no longer entitled to receive foreign funds or utilize
its existing funds without permission from the ministry.
● 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.
○ 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”.
● Registrations
are also cancelled when an audit finds irregularities in the finances of an NGO
in terms of misutilisation of foreign funds.
● 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.
Appeal
against cancellation:
● 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.
● All
orders of the government can be challenged in the High Court.
Recent
Amendment:
The law
was amended again by the current government in 2020, giving the government
tighter control and scrutiny over the receipt and utilization of foreign funds
by NGOs. The FCRA requires every person or NGO seeking 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.
● 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 organizations of a political nature.
New
rules:
● 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.
● 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.