In News:

• Recently, the Ministry of Home Affairs, Government of India, notified changes in the Foreign Contribution (Regulation) Act (FCRA) and its rules.
• Political parties, judges, government employees and media houses among others, who are all prohibited from accepting foreign contributions, will no longer be prosecuted if they receive foreign contributions from relatives abroad and fail to notify the government within 90 days.

What’s in today’s article:

• About FCRA
• News Summary (About the new changes made)

The Foreign Contribution (Regulation) Act (FCRA):

• About the FCRA:
  • During the Emergency in 1976, the FCRA was enacted in response to concerns that foreign powers were interfering in Indian affairs by pumping money into the country through independent organisations.
  • The law sought to regulate foreign donations to individuals and organisations in order for them to function in accordance with the values of a sovereign democratic republic.
  • In 2010, the FCRA was amended to consolidate the law on the use of foreign funds and the Foreign Contribution (Regulation) Rules (FCRR), 2011, were notified.
    • It is implemented by the Ministry of Home Affairs (MHA), which can prohibit the use of foreign funds 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 use of foreign funds by non-governmental organisations (NGOs).
• Salient features:
  • 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.
    • To file annual returns and 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
    • Organisations of a political nature.
• Registration under FCRA:
• NGOs seeking foreign funding must submit an online application in a prescribed format, along with the necessary documentation.
• Individuals or organisations with specific cultural, economic, educational, religious, or social programs are eligible for FCRA registration.
• Following the NGO's application, the MHA conducts background checks on the applicant through the Intelligence Bureau and processes the application accordingly.
• The MHA must approve or deny the application within 90 days.
• FCRA registration is valid for 5 years after it is granted. NGOs are expected to apply for renewal within 6 months of their registration expiry date.
• Cancellation of registration:
  • The government reserves the right to revoke any NGO's FCRA registration if it discovers a violation of the Act.
  • Registration can be revoked if -
    • The NGO has not engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years or if it has become defunct.
    • In the opinion of the Central Government, it is necessary in the public interest to revoke the certificate, etc.
    • An audit uncovers irregularities in an NGO's finances, such as the misutilisation of foreign funds.
  • No cancellation order can be issued unless the person or NGO involved has been given a reasonable opportunity to be heard.
  • Once an NGO's registration is cancelled, it is ineligible for re-registration for 3 years.
  • The ministry also has the authority to suspend an NGO's registration for 180 days pending an investigation and to freeze its funds.
  • All government orders can be challenged in the High Court.

News Summary - The new changes made:

• The Foreign Contribution (Regulation) Amendment Rules, 2022, were recently notified by the MHA.
• According to the FCRR, 2011, any person who receives a foreign contribution in excess of 1 lakh rupees or the equivalent in a fiscal year from any of his relatives must notify the central government (details of funds) within 30 days of receiving such contribution.
  • The amended rules related to the FCRA allow Indians to receive up to ₹ 10 lakh in a year from relatives staying abroad without informing the authorities. The earlier limit was ₹ 1 lakh.
  • If the amount exceeds, the individuals will now have 90 days to inform the government instead of 30 days earlier.
• Similarly, the amended rules have given individuals and organisations or NGOs 45 days to inform the ministry about bank account (s) that are to be used for utilisation of such funds. This time limit was 30 days earlier.
• Anyone receiving foreign funds under the FCRA will now be required to comply with the existing provision of submitting an audited statement of accounts on receipts and utilisation of the foreign contribution for each fiscal year.
  • As a result, a provision requiring an NGO or individual receiving foreign funds to declare such contributions on its official website every quarter has been repealed.
• In a separate notification, the MHA made five more offences under the FCRA “compoundable”, making 12 such offences compoundable instead of directly prosecuting the organisations or individuals.
  • Earlier, offences related to accepting hospitality from foreign entities without informing, receiving money in accounts other than specified for foreign funds, etc.
  • The FCRA violations which have become compoundable now include failure to intimate about receipt of foreign funds, opening of bank accounts, failure to place information on website, etc.
  • The amount of penalty ranges from ₹ 10,000 to ₹ 1 lakh or 5% of foreign funds, whichever is higher.