FCRA and the case of foreign funding in India
Polity & Governance
31st Jan, 2022
The Supreme Court asked 6,000-odd NGOs to go back to the government for redressal of their grievances on non-renewal of their Foreign Contribution Regulation Act (FCRA) registration.
- NGO Global Peace Initiative had petitioned the court that the NGOs should be allowed to continue receiving and utilising foreign funds until the pandemic is over.
- The FCRA registrations of about 5,900 NGOsceased to be active after December 31, 2021, owing to either the NGOs not applying for renewal before the due date or the MHA refusing their renewal for alleged violation of the Act.
- On December 25 last year, the MHA refused to renew the FCRA registration of Mother Teresa’s Missionaries of Charity, based on “adverse inputs”.
- The registration was, however, restored on January 6, and Missionaries of Charity’s FCRA certificate has now been made valid until the end of 2026.
What is the FCRA?
A donation, delivery or transfer or any article, currency or foreign security by any person who has received it from any foreign source, either directly or through one or more persons refers to foreign contribution.
- The FCRA was enacted during the Emergency in 1976 in an atmosphere of apprehension that foreign powers were interfering in India’s affairs by pumping in funds through independent organisations.
- These concerns had been expressed in Parliament as early as in 1969.
- 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”.
- An amended FCRA was enacted under the UPA government in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.
- The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs.
- Broadly, the FCRA requires every person or NGO wishing 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, and to utilise those funds only for the purpose for which they have been received and as stipulated in the Act.
- They are also required to file annual returns, and they must not transfer the funds to another NGO.
- The Act prohibits 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.
Non-Governmental Organization (NGOs)
The World Bank defines NGOs as, “private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development.”
- An NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level.
- These organizations perform a variety of service and humanitarian functions, and bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information.
- An NGO can either be registered as a trust society or as a company under Section 25.
- o Trust: A trust is a possible form of not-for-profit entity in India, registered under the Indian Trusts Act, 1982. A trust is a legal arrangement in which a person holds the property for the sake of some other person.
- o Society: Society is an association of person, who come together to fulfil any particular purpose, described under the act. A society registered under the provisions of the Societies Registration Act, 1860 (the Act) with the Registrar of the Societies, with aims and structure as laid down in the Act.
What is the process of granting of FCRA resigtration?
- Online application: NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation.
- FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
- Inquiry through IB: Following the application, the MHA makes inquiries through the Intelligence Bureau (IB) into the antecedents of the applicant, and accordingly processes the application.
- Under the FCRA, the applicant (should not):
- should not be fictitious or benami
- should not have been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another
- should not have been prosecuted for or convicted of creating communal tension or disharmony
- should not have been found guilty of diversion or misutilisation of funds
- should not be engaged or likely to be engaged in the propagation of sedition
- Approval or rejection: The MHA is required to approve or reject the application within 90 days.
- In case of failure to process the application in the given time, the MHA is expected to inform the NGO of the reasons for the same.
For how long is approval granted?
- Validity: Once granted, FCRA registration is valid for five years.
- Renewal: NGOs are expected to apply for renewal within six months of the date of expiry of registration.
- In case of failure to apply for renewal, the registration is deemed to have expired, and the NGO is no longer entitled to receive foreign funds or utilise its existing funds without permission from the ministry.
On what basis is approval cancelled?
- Act violation: The government reserves the right to cancel the FCRA registration of any NGO if it finds it to be in violation of the Act.
- False application: Registration can be cancelled if an inquiry finds a false statement in the application; if the NGO is found to have violated any of the terms and conditions of the certificate or renewal; if it has not been engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years; or if it has become defunct.
- For public interest: It can also be cancelled if “in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate”.
- Irregularities: Registrations are also cancelled when an audit finds irregularities in the finances of an NGO in terms of misutilisation of foreign funds.
- According to FCRA, no order of cancellation of certificate can be made unless the person or NGO concerned has been given a reasonable opportunity of being heard. Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
- The ministry also has powers to suspend an NGO’s registration for 180 days pending inquiry, and can freeze its funds.
- All orders of the government can be challenged in the High Court.