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Foreign Contribution Regulation Act

  Mar 08, 2023

Foreign Contribution Regulation Act

Q. Why is this in News?
A. Recently, the Ministry of Home Affairs suspended the Foreign Contribution Regulation Act (FCRA) licence of the Centre for Policy Research (CPR).

  • CPR (not-for-profit society), along with Oxfam India and the Independent and Public-Spirited Media Foundation (IPSMF), was surveyed by the Income Tax department earlier.

Q. What is the Foreign Contribution Regulation Act?

  • About:
    • 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.
  • Amendments:
    • An amended FCRA was enacted in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.
    • The law was amended again in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs.
  • Criteria:
    • 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 utilize those funds only for the purpose for which they have been received and as stipulated in the Act.
    • FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
  • Exceptions:
    • Under the FCRA, the applicant should not be fictitious and 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.
    • The applicant should also not have been prosecuted for or convicted of creating communal tension or disharmony.
      • Also, should not be engaged or likely to be engaged in the propagation of sedition.
    • 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 organisations of a political nature.
  • Validity:
    • FCRA registration is valid for 5 years, and NGOs are expected to apply for renewal within six months of the date of expiry of registration.
    • The government can also cancel the FCRA registration of any NGO if it finds that the NGO is in violation of the Act, if it has not been engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years, or if it has become defunct.
    • Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
  • FCRA 2022 Rules:
    • In July 2022, the MHA effected changes to FCRA rules which 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.