GoI to amend FCRA: Bill Introduced in Lok Sabha

Published: September 21, 2020

A bill was recently introduced in Lok Sabha to amend the FCRA act, 2010. FCRA act is Foreign Contribution (Regulation) Act.  The bill proposed to include public corporations owned and controlled by the Government of India under the list of entities that are not eligible to receive foreign funding. The bill also proposed to include public servants under the list.

Highlights

The bill also makes Aadhar mandatory for all the non-government organisations and other organisations to seek foreign contributions. It has proposed to limit the foreign funds received under the act from 50% to 20%. These funds are predominantly used for administration purposes.

Background

  • The main aim of the amendment is to streamline the provisions of FCRA act. The amendment aims to increase transparency and accountability. It also aims to strengthen compliance mechanism in the utilisation of foreign contribution.
  • Currently several organisations are transferring their foreign contributions under section 7 of FCRA, 2010. If amended this may not be possible. Also, the government will be empowered to question a violator upon the use of funds received from a foreign organisation.
  • If the bill is passed the persons who have been granted certificate for the foreign funding will receive funding only through accounts that are designated as FCRA account. Such accounts can be opened only in banks designated by the government of India.

Why the amendment?

The Government of India states that the annual inflow of foreign funds has become twice between the time period of 2010 and 2019. However, the contributions received in this route were not utilised by the recipient registered under FCRA. Thus it is important to regulate these foreign contributions under the act.

Rules imposed by the act

The following conditions have been imposed by the act on the use of foreign funds

  • The funds received by a Non governmental organisation from foreign contributor should compulsorily used only for the purpose for which the funds were received.
  • The funds shall not be used in speculative activities that or defined under the act.
  • The funds shall not be transferred to an entity that is not registered under the act
  • An asset purchased with the funds received, shall not be in the name of office members or bearers but only in the name of the organisation (NGO) that received the funding.

Definition of foreign contribution

The term foreign contribution has been defined as an article on currency e other than gift received from a foreign source for personal use in securities.

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