FOREIGN CONTRIBUTION REGULATION ACT (FCRA)

1. Context

2. Foreign Contribution Regulation Act

• 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". 
• Foreign funding in India is regulated under the FCRA act. Individuals are permitted to accept foreign contributions without the permission of MHA. However, the monetary limit for acceptance of such foreign contributions shall be less than Rs. 25,000.
• It is implemented by the Ministry of Home Affairs. 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 organizations. These concerns were, in fact, even older- they had been expressed in Parliament as early as 1969.

3. Provisions of the Act

• The FCRA requires every person or NGO wishing to receive foreign donations to be registered under the act, to open a bank account for the receipt of foreign funds in the statute Bank of India, Delhi, and to utilize those funds only 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 the receipt of foreign funds by candidates for elections, journalists or newspapers and media broadcast companies, judges and government servants, members of the legislature and political parties or their office-bearers, and organizations of a political nature.

4. Key Highlights of the 2020 Amendment

• It bars public servants from receiving foreign contributions. It prohibits the transfer of foreign contributions to any other person.
• Aadhar number is mandatory for all office bearers, directors, or key functionaries of a person receiving foreign contributions, as an identification document.
• The foreign contribution must be received only in an account designated by the bank as an FCRA account in such branches of the State Bank of India, New Delhi.
• No funds other than foreign contributions should be received or deposited in this account.
• It allowed the government to restrict the usage of unutilized foreign contributions. This may be done if, based on an inquiry the government believes that such a person has contravened provisions of the FCRA.
• While NGOs earlier could use up to 50 percent of funds for administrative use, the new amendment restricted this use to 20 percent.

5. Registration under FCRA

• NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation. FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programs.
• Following the 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 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. In case of failure to apply for renewal, the registration is deemed to have expired.