Extension of FCRA Registration Validity for NGOs | UPSC

FCRA registration validity for NGOs, set to expire on March 31, has been extended by the Ministry of Home Affairs until June 30.

About Foreign Contribution (Regulation) Act (FCRA):

• The FCRA was enacted during the Emergency in 1976 amidst concerns that foreign powers were interfering in India’s affairs by funding independent organizations.
• It aimed to regulate foreign donations to individuals and associations, ensuring they operated “in a manner consistent with the values of a sovereign democratic republic.”
• In 2010, an amended FCRA was enacted to “consolidate the law” on the utilization of foreign funds and “to prohibit” their use for “any activities detrimental to national interest.”
• The law underwent further amendment in 2020, granting the government tighter control and scrutiny over the receipt and utilization of foreign funds by NGOs.

Provisions of FCRA:

• The FCRA mandates that any person or NGO intending to receive foreign donations must:
  • Register under the Act.
  • Open a designated bank account in the State Bank of India, Delhi, for receiving foreign funds.
  • Utilise those funds only for the purpose for which they have been received and as stipulated in the Act.
• They are required to file annual returns, and they must not transfer the funds to another NGO.
• The Act prohibits the 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.

Eligibility for FRCA registration:

• FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
• In 2017, the MHA amended the FCRA law, previously repealed in 1976, through the Finance Bill route.
  • This amendment allowed political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.
• Under the FCRA, the applicant must not be fictitious or benami and should not have been prosecuted or convicted for engaging in activities aimed at conversion through inducement or force, directly or indirectly, from one religious faith to another.
• The applicant should also not have been prosecuted for or convicted of creating communal tension or disharmony, misutilization of funds, or engaging in the propagation of sedition.
• In 2015, the MHA introduced new rules mandating NGOs to declare that accepting foreign funds won’t compromise India’s sovereignty, friendly relations with other nations, or communal harmony.

Validity of registration:

• Once granted, FCRA registration is valid for five years.
• 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.

Significance of FCRA:

• The FCRA is crucial for regulating foreign donations to ensure transparency, accountability, and safeguarding internal security.
• It upholds sovereignty, protects legitimate sources and purposes of foreign funds.
• Streamlining registration processes for NGOs and organizations is crucial to facilitate compliance and enhance transparency.

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