Foreign Contribution Regulation Act is a consolidating act whose scope is to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.

Salient features:

• The central government has the power to prohibit any persons or organizations from accepting foreign contribution or hospitality if it is determined that such acceptance would likely “affect prejudicially” (i) the sovereignty and integrity of India, (ii) public interest, (iii) freedom or fairness of election to any legislature, (iv) friendly relations with any foreign State, or (v) harmony between religious, racial, social, linguistic or regional groups, castes or communities.

• The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence electoral politics, public servants, judges and other people working the important areas of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organizations may function in a manner consistent with the values of the sovereign democratic republic.

• Foreign funds received as fees for service, costs incurred for goods or services in the ordinary course of business, and trade or commerce are excluded from the definition of foreign contribution.

• The Central Bureau of Investigation or any other Government investigating agency that conducts any investigation under the Act shall furnish reports to the Central Government, on a quarterly basis, indicating the status of each case that was entrusted to it, including information regarding the case number, date of registration, date of filing charge sheet, court before which it has been filed, progress of trial, date of judgment and the conclusion of each case.

• In case the foreign contribution is proposed to be transferred to a person who has not been granted a certificate of registration or prior permission by the Central Government, the person concerned may apply for permission to the Central Government to transfer a part of the foreign contribution, not exceeding ten per cent, of the total value of the foreign contribution received. The application shall be countersigned by the District Magistrate having jurisdiction in the place where the transferred funds are sought to be utilised. The District Magistrate concerned shall take an appropriate decision in the matter within sixty days of the receipt of such request from the person. The donor shall not transfer any foreign contribution until the Central Government has approved the transfer.

New provisions

Seeking to promote transparency in dealings with foreign-funded NGOs, the Modi government on Monday notified the amended Foreign Contribution (Regulation) Rules, 2015, that require all FCRA services and transactions to be made online

All applications for registration, grant of prior permission and renewal of registration under FCRA, 2010, will now be accepted online, with fee for various FCRA services to be deposited through a payment gateway.
On its part, the FCRA division of the home ministry will issue digitally signed registration certificates, prior permission sanctions etc to applicants through emails.

As per the amended FCRA rules, all NGOs registered or granted prior permission under FCRA are now required to upload details of foreign contributions received and utilized by them every three months on their website or the FCRA website, fcraonline.nic.in. TOI had reported this proposed reform on July 27, 2015. The original FCRR draft had kept this periodicity at seven days, which was objected to by many NGOs.

The new FCRA rules ensure that the human interface with foreign-funded NGOs is minimized, with all queries and replies to applicants to be made through emails.

All FCRA designated bank accounts and utilization accounts will now have to be brought on the online platform of public finance management service (PFMS) of controller general of accounts, ministry of finance.