The Foreign Contribution (Regulation) Amendment Bill, 2020

The Foreign Contribution (Regulation) Amendment Bill, 2020 was introduced in Lok Sabha on September 20, 2020. The Foreign Contribution (Regulation) Act, 2010 which regulates the acceptance and utilization of foreign contributions by individuals, associations, and companies are amended by this Bill.

Background

Soon after India attained its independence, the need for codified regulations regarding foreign contributions was felt as there was a surge in the number of foreign-funded NGOs in the country. It could be seen that the prima facie motive behind such NGOs was a political or religious objective.

The government enacted the Foreign Contribution (Regulation) Act, 1976, intending to regulate the acceptance and utilization of foreign contributions or hospitality. Due to shortcomings in the Act, it was later repealed and replaced by the Foreign Contribution (Regulation) Act, 2010.

What has changed

Some key changes brought by this amendment are:

1. Addition of public servants to the list of persons prohibited from receiving foreign contribution – Under this Act, several people, such as Judges, candidates for election, editors or publishers of the newspaper, etc. were prohibited from receiving foreign contribution. The Bill adds that any person who falls under the category of a public servant as per IPC, i.e., includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty, is also prohibited from receiving foreign contribution.
2. Prohibition on transfer of foreign contribution – Under this Act, the foreign contribution could be transferred to any person provided that the said person was also registered/ permitted to receive a foreign contribution. The Bills prohibit every transfer of foreign contribution.
3. Aadhaar registration – The Bill states that any person who seeks to obtain prior permission to receive the foreign contribution, registration, or renewal of registration, must provide as an identification document the Aadhaar number of all its office bearers, directors, or key functionaries.
4. Maintenance of FCRA Account – As per the Bill, foreign contribution can only be received in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, and no funds other than foreign contribution must be received in this account. These funds can be moved to any other FCRA account in any scheduled bank of their choice for keeping or utilizing the received contribution.
5. Reduction in use of foreign contribution for administrative purposes – The Bill states that on receiving the foreign contribution, the recipient must utilize the sum for the purpose it was received. Further, the limit for using the same for an administrative purpose is reduced from 50% to 20%.
6. Restriction in utilisation of foreign contribution – The Bill states that Central Government may restrict the sage of the foreign contribution which remains unutilized, for persons who were granted the prior permission to receive such contribution if, on summary inquiry, the government believes that there has been a contravention of any provision of this Act.

Our word

The Bill aims to strengthen compliance mechanisms, as well as to enhance transparency and accountability, and facilitate genuine NGOs. The NGO sector is already tightly regulated and discourages international donors to make grants in India. In the current times, when foreign funds are most needed for Covid-19 related relief activities, this Bill may prove itself to be counter-productive.