FCRA 2010 is a consolidating act passed by the Government of India in the year 2010. It seeks to regulate foreign contributions or donations and hospitality (air travel, hotel accommodation etc) to Indian organizations and individuals and to stop such contributions which might damage the national interest. It is an act passed for regulating and prohibiting the acceptance and utilization of foreign contribution or foreign hospitality by companies, associations or individuals for such activities that could prove to be detrimental to the national interest and for matters connected therewith or incidental thereto.
Since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the purview of the Home Ministry and not the Reserve Bank of India (RBI).
Need for FCRA
The act aims at keeping a check on foreigners influencing the Indian electoral politics, journalists, public servants etc. for wrong purposes or activities detrimental to the public interest. Those violating the provisions of FCRA can be jailed up to a term of 5 years.
Salient features of FCRA 2010
- A provision was made for the cancellation of registrations of NGOs if the Home Ministry believes that the organisation is political and not neutral.
- The registration certificate granted to the NGOs under the 2010 act came with five-year validity.
- A provision was inserted stating that the assets of the person who has become defunct needs to be disposed of in a manner stated by the government.
- A separate account needs to be maintained by the organisations to deposit the Foreign Contributions received and no other funds except for Foreign Contributions shall be deposited in that account.
- Every bank would be obligated to report to the prescribed authority, the amount of foreign remittances received and other related details such as the source, manner of receipt etc.
Amendments to FCRA
The Foreign Contribution (Regulation) Act (FCRA), 2010, regulates foreign contributions to protect national sovereignty and security. Amendments in 2020 mandated Aadhaar for office bearers, SBI accounts, and reduced expense limits. FCRA Rules 2022 raised the annual remittance limit from relatives to ₹10 lakh.
Foreign Contribution (Regulation) Act (FCRA), 2010
The FCRA, 2010 governs the receipt and use of foreign contributions by individuals, associations, and companies operating in India. It aims to ensure that foreign donations do not compromise the nation’s sovereignty or internal security.
Foreign Contribution (Regulation) Amendment Act, 2020
he Foreign Contribution (Regulation) Amendment Act, 2020 introduced key changes as outlined below:
- Prohibition on Transfers: Foreign contributions cannot be transferred to an individual, an association, or a registered company.
- Mandatory Aadhaar: Office bearers must provide an Aadhaar or passport/OCI card for registration.
- FCRA Account: Contributions must be received in a designated SBI branch in New Delhi.
- Reduced Administrative Use: Administrative expense limits were reduced from 50% to 20%.
- Renewal of licence: The government can inquire before renewing certificates, checking for fictitious entities or misuse of funds.
- Suspension Extension: Initially, registration suspension can be enforced for a period of 180 days. This suspension can be further extended by an additional 180 days.
- Surrender of Certificate: Entities can surrender their certificate post-government approval.
- Utilisation Restrictions: The government can restrict unutilized funds based on inquiries.
Foreign Contribution Regulation (Amendment) Rules 2022
In 2022, the government amended the Foreign Contribution (Regulation ) Rules, 2011, to strengthen safeguards against foreign contributions that could harm national interests, with key updates introduced under the FCRA Rules 2022:
- These rules are designed to prevent the acceptance and use of foreign contributions or hospitality for activities that may harm national interests.
- Under the FCRA Rules 2022, Indians can now receive up to ₹10 lakh annually from relatives abroad without notifying the authorities, compared to the previous limit of ₹1 lakh.
Impact of FCRA
The Foreign Contribution Regulation Act (FCRA) revokes licences for non-compliance, misuse of funds, or activities threatening national security. Since 1976, over 20,701 licences, including Oxfam India’s, have been cancelled. Key issues are as below:
- Non-Compliance Issues: FCRA licences can be cancelled due to non-compliance with rules, such as failing to submit required reports or misusing foreign contributions.
- Involvement in Detrimental Activities: Licences may be revoked for activities against India’s national interest or security.
- Operational Challenges: NGOs can lose their licences if they remain non-operational for two consecutive years or become defunct.
- Stringent Regulations: Grounds for cancellation include obtaining registration through false statements or violating certificate conditions, causing operational difficulties for many NGOs.
- License Cancellations: Since 1976, over 20,701 NGO licences, including those of Oxfam India, were cancelled for violations.
- As of April 3, 2024, over 16,242 NGOs have valid FCRA licences, while 14,396 licences have expired, reflecting stringent regulatory oversight and compliance challenges.
FAQs
What is the FCRA Registration Process?
- Register under FCRA with the Ministry of Home Affairs (MHA).
- The organization must have a three-year track record of working in India.
- Submit a detailed application along with required documents such as a legal constitution, audited financial statements, and proof of past work.
- Once approved, the organization will receive an FCRA Registration Number.
What is the purpose of FCRA?
- To ensure transparency in the acceptance and utilization of foreign funds.
- To prevent misuse of foreign contributions by ensuring that they do not interfere with India’s political interests or affect its sovereignty.
- To regulate foreign donations to organizations that aim to carry out activities for public welfare.
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