Foreign Contribution (Regulation) Amendment Bill, 2020Approx Read Time: 7 min
- The government has introduced the Foreign Contribution (Regulation) Amendment Bill, 2020 in the Lok Sabha.
- It seeks to amend the Foreign Contribution (Regulation) Act (FCRA), to make it Aadhaar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.
- The government has introduced the Foreign Contribution (Regulation) Amendment Bill, 2020 to amend the Foreign Contribution (Regulation) Act (FCRA).
- Under the new Bill, Aadhar numbers of the office-bearers of any NGO will be mandatory for registration and public servants will be barred from receiving funds from abroad.
- There are various other provisions as listed below.
Need for the amendment:
- The government while introducing the bill justified the proposed amendments saying that they would ensure better compliance mechanism under FCRA.
- It says the amendment is required to enhance transparency and accountability in the receipt and utilisation of foreign contributions worth thousands of crores of rupees every year and facilitating the genuine NGOs or associations who are working for the welfare of society.
About: Foreign Contributions
- Foreign Contribution:
- Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.
- Foreign Hospitality:
- Any offer from a foreign source to provide foreign travel, boarding, lodging, transportation or medical treatment cost.
- Foreign source includes:
- Foreign citizens.
- Foreign companies, corporations and MNCs.
- Foreign government and their agencies.
- International agencies other than specified and government notified agencies.
- Foreign trusts, foundations, trade unions, societies, clubs or any other associations of individuals formed outside India.
About: Foreign Contribution (Regulation) Act, 2010:
- Foreign contribution is regulated under the provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) and the Rules thereunder.
- The primary purpose of this Act is to ensure that foreign contribution is utilized for bonafide activities without compromising on concerns for national security.
- The purpose of the Act/Rules is to regulate and ensure that the receipt and utilisation of foreign contribution by institutions, Associations, NGOs etc as well as acceptance of foreign hospitality by individuals working in important areas of national life (like judges, public servants, office bearers of political parties, members of legislature, etc.) is in a manner consistent with India’s values as a sovereign democratic republic.
- The Act has put into place a system of screening to ensure that the Associations or office bearers thereof do not divert the foreign contribution towards activities detrimental to national interest.
- The act is implemented by the Ministry of Home Affairs, Government of India.
- The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019.
- However, many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act.
- Many of them have not followed basic statutory compliances such as submission of annual returns and maintenance of proper accounts.
- This has led to a situation where the Central Government had to cancel certificates of registration of more than 19,000 recipient organizations, including NGOs, during the period between 2011 and 2019.
- Criminal investigations also had to be initiated against dozens of such NGOs which indulged in outright misappropriation or mis-utilization of foreign contribution.
- As a result, there was a need for amendments to the FCRA to ensure better compliance, and to prevent misuse of foreign funds.
The Foreign Contribution (Regulation) Amendment Bill, 2020
- The Foreign Contribution (Regulation) Amendment Bill, 2020 (from here referred to as The Bill) seeks to amend the Foreign Contribution (Regulation) Act, 2010 (from here referred to as The Act).
- Aadhaar for registration:
- Under the Act, a person may accept foreign contribution if they have: (i) obtained a certificate of registration from central government, or (ii) not registered, but obtained prior permission from the government to accept foreign contribution.
- The Bill adds that any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document. In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.
Prohibition to accept foreign contribution:
- Under the Act, certain persons are prohibited to accept any foreign contribution.
- These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
- The Bill adds public servants (as defined under the Indian Penal Code) to this list, and they cannot accept any foreign contributions.
- Public servant includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.
Transfer of foreign contribution:
- Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution).
- The Bill amends this to prohibit the transfer of foreign contribution to any other person.
- The term ‘person’ under the Act includes an individual, an association, or a registered company.
- Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them. However, they may open more accounts in other banks for utilization of the contribution.
- The Bill amends this to state that foreign contribution must be received only in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government.
- No funds other than the foreign contribution should be received or deposited in this account.
- The person may open another FCRA account in any scheduled bank of their choice for keeping or utilizing the received contribution.
Renewal of license:
- Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration.
- The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:
- Is not fictitious or benami.
- Has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion.
- Has not been found guilty of diversion or misutilization of funds, among others conditions.
Reduction in use of foreign contribution for administrative purposes:
- Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses.
- The Bill provides that they must not use more than 20% of the contribution for meeting administrative expenses.
Suspension of registration:
- Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days.
- The Bill adds that such suspension may be extended up to an additional 180 days.
Criticism of the amendment:
- Opposition MPs alleged the amendment was aimed at crushing dissent and confining unnecessary power in hands of the government.