Foreign Contribution (Regulation) Act

04 Feb 2024 4 mins Download PDF

Context: Recently, after a record 1,111 NGOs got Foreign Contribution Regulation Act (FCRA) nod in 2023, 30 get clearance in January. Situated in Delhi, a Buddhist monastic order originating from Taiwan has secured approval under the Foreign Contribution (Regulation) Act (FCRA) of 2010, enabling them to access foreign funds.

Foreign Contribution Regulation Act (FCRA)

• The FCRA, established during the Emergency in 1976, was enacted to address concerns about foreign interference in India's internal affairs.
• Its primary objective is to oversee foreign donations to individuals and groups, ensuring their operations align with the principles of a sovereign democratic republic.
• Amendments in 2010 and 2020 tightened government control and scrutiny over foreign funds received by Non-Governmental Organizations (NGOs).

FCRA registration

• NGOs seeking foreign contributions must undergo an online application process with the required documentation.
• The Ministry of Home Affairs (MHA) conducts inquiries through the Intelligence Bureau to assess the applicant's background.
• FCRA requirements mandate registration under the Act, the establishment of a designated bank account in the State Bank of India, Delhi, and the utilization of funds solely for their intended purpose, as outlined in the Act.
• NGOs must submit annual returns and refrain from transferring funds to other organizations.

FCRA requirements:

• Recent changes to FCRA rules in 2022 expanded the number of compoundable offenses from 7 to 12.
• Additionally, exemptions were granted for contributions below Rs 10 lakh from relatives abroad, with an extended time limit for intimation of bank account openings.
• FCRA approvals, once granted, are valid for five years. NGOs must initiate the renewal process within six months of the registration's expiry to maintain eligibility for foreign funds.
•  Failure to renew results in the expiration of registration, barring the NGO from receiving or utilizing foreign funds without ministry permission.

Despite the regulatory framework, challenges persist, including administrative delays, stringent compliance requirements, potential political interference, ambiguity in the law, and a lack of clarity.