Foreign Contribution (Regulation) Act

Foreign Contribution (Regulation) Act (FCRA)

#GS-02 Governance

For Prelims:

Foreign Contribution (Regulation) Act (FCRA) 1976:

  • The FCRA was enacted during the Emergency in 1976 amid rising concerns about foreign powers 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.
  • The act was amended in 1984 which made it mandatory for all the Non Governmental Organisations to register themselves with the Home Ministry.
  • The act was replaced with a stricter act in 2010.

Foreign Contribution (Regulation) Act (FCRA) 2010:

New Provisions:

  • The new act makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the State Bank of India’s New Delhi branch was inserted.
  • All NGOs seeking foreign donations have to open a designated FCRA account at the SBI branch.
  • No funds other than the foreign contribution should be received or deposited in this account.
  • The NGOs can retain their existing FCRA account in any other bank but it will have to be mandatorily linked to the SBI branch in New Delhi.
  • Foreign contribution has to be received only through banking channels and it has to be accounted for in the manner prescribed.
  • Under the Act, organisations are required to register themselves every five years.
  • It bars public servants from receiving foreign contributions.
  • Aadhaar number is mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
  • While NGOs earlier could use up to 50% funds for administrative use, the new amendment restricted this use to 20%.

Current Changes:

  • United Nations and 117 international organisation’s contribution to Indian entities will not be covered under the stringent Foreign Contribution (Regulation) Act (FCRA), 2010, as per Union Home Ministry.

Source “Funds from UN organisations to be excluded from FCRA