Amendments to existing lawsLegislation Updates

The Foreign Contribution (Regulation) Amendment Bill, 2020 received Presidential Assent on 28-09-2020.

The Foreign Contribution (Regulation) Amendment Act, 2020

Why has the bill been proposed?

The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts.

This has led to a situation where the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019.

Therefore, there is a need to streamline the provisions of the said Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year and facilitating genuine non-Governmental organisations or associations who are working for the welfare of the society.

Highlights of the Bill are as follows:

Prohibition to accept foreign contribution [Section 3]

No foreign contribution shall be accepted by any public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government.

Prohibition to transfer foreign contribution to other person [Section 7]

Now the bill proposes the prohibition to the transfer of foreign contribution to another person and the requirement of valid certificate has also been removed. i.e earlier a person could transfer to the person with a valid certificate, but that has been removed now.

Restriction to utilise foreign contribution for the administrative purpose [Section 8]

The foreign contributions received shall be used only up to 20% which earlier was 50%.

Registration of certain persons with Central Government [Section 11]

Only after the prior permission of the Central Government a person who is not registered shall accept the foreign contribution:

Provided that the Central Government, on the basis of any information or report, and after holding a summary inquiry, has reason to believe that a person who has been granted prior permission has contravened any of the provisions of this Act, it may, pending any further inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution which has not been received or, as the case may be, any additional foreign contribution, without prior approval of the Central Government:

Provided further that if the person referred to in sub-section (1) or in this sub-section has been found guilty.”.

Grant of Certificate of Registration [Section 12]

Every person who makes an application for grant of a certificate shall be required to open an FCRA Account in the manner mention in Section 17 Aand mention the details of such an account in his application.

Mandatory Aadhaar [Section 12 A] [New Section]

As an identification document for the purpose of this Act, Aadhaar number for all Office bearer or directors of all NGOs and other organization which is eligible for foreign contribution is mandatory. However, a passport or overseas citizen of India card is required in the case of foreign nationals.

Suspension of Certificate [Section 13]

Time limit for suspension of Certificate issued under FCRA has been stated to be as either 180 days or such further period not exceeding 180 days, as may be specified.

Surrender of Certificate [Section 14 A] [New Section]

If the Central Government is satisfied after inquiry as it deems fit, it can permit a person to surrender the certificate.

Foreign Contribution through Scheduled Bank [Section 17]

Now, under this provision, every person who has been granted a certificate or prior permission under Section 12 shall receive foreign contribution only in an account designated as “FCRA Account” which shall be opened by him in such branch of the State Bank of India at New Delhi.

Along with the above stated key highlights, amendments under Section 15 and 16 have also been made which can be referred to in the bill below.

Please read the Act here: ACT 


Ministry of Law and Justice

Legislation UpdatesStatutes/Bills/Ordinances

The Foreign Contribution (Regulation) Amendment Bill, 2020

Lok Sabha passed the Foreign Contribution (Regulation) Amendment Bill, 2020 on 21-09-2020.

Why has the bill been proposed?

The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts.

This has led to a situation where the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019.

Therefore, there is a need to streamline the provisions of the said Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year and facilitating genuine non-Governmental organisations or associations who are working for the welfare of the society.

Highlights of the Bill are as follows:

Prohibition to accept foreign contribution [Section 3]

No foreign contribution shall be accepted by any public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government.

Prohibition to transfer foreign contribution to other person [Section 7]

Now the bill proposes the prohibition to the transfer of foreign contribution to another person and the requirement of valid certificate has also been removed. i.e earlier a person could transfer to the person with a valid certificate, but that has been removed now.

Restriction to utilise foreign contribution for the administrative purpose [Section 8]

The foreign contributions received shall be used only up to 20% which earlier was 50%.

Registration of certain persons with Central Government

[Section 11]

Only after the prior permission of the Central Government a person who is not registered shall accept the foreign contribution:

Provided that the Central Government, on the basis of any information or report, and after holding a summary inquiry, has reason to believe that a person who has been granted prior permission has contravened any of the provisions of this Act, it may, pending any further inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution which has not been received or, as the case may be, any additional foreign contribution, without prior approval of the Central Government:

Provided further that if the person referred to in sub-section (1) or in this sub-section has been found guilty.”.

Grant of Certificate of Registration [Section 12]

Every person who makes an application for grant of a certificate shall be required to open an FCRA Account in the manner mention in Section 17 Aand mention the details of such an account in his application.

Mandatory Aadhaar [Section 12 A] [New Section]

As an identification document for the purpose of this Act, Aadhaar number for all Office bearer or directors of all NGOs and other organization which is eligible for foreign contribution is mandatory. However, a passport or overseas citizen of India card is required in the case of foreign nationals.

Suspension of Certificate [Section 13]

Time limit for suspension of Certificate issued under FCRA has been stated to be as either 180 days or such further period not exceeding 180 days, as may be specified.

Surrender of Certificate [Section 14 A] [New Section]

If the Central Government is satisfied after inquiry as it deems fit, it can permit a person to surrender the certificate.

Foreign Contribution through Scheduled Bank [Section 17]

Now, under this provision, every person who has been granted a certificate or prior permission under Section 12 shall receive foreign contribution only in an account designated as “FCRA Account” which shall be opened by him in such branch of the State Bank of India at New Delhi.

Along with the above stated key highlights, amendments under Section 15 and 16 have also been made which can be referred to in the bill below.

Please read the bill here: BILL


Lok Sabha

Hot Off The PressNews

Supreme Court: The bench of L. Nageswara Rao and Deepak Gupta, JJ has held that the support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution. It said,

Refusing to declare Sections 5 (1) and 5 (4) of the Foreign Contribution (Regulation) Act, 2010 and Rules 3 (i), 3 (v) and 3 (vi) of the Foreign Contribution (Regulation) Rules, 2011 violative of Articles 14, 19 (1) (a), 19 (1) (c) and 21 of the Constitution of India, the bench said,

“It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature.”

The Court explained that the purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds. Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected.

It, however, added that such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions. Therefore, such of those organisations which are working for the social and economic welfare of the society cannot be brought within the purview of the Act or the Rules by enlarging the scope of the term ‘political interests’.

Hence, stating that it is only those organisations which have connection with active politics or take part in party politics, that are covered by Rule 3 (vi), the Court held,

“Any organisation which habitually engages itself in or employs common methods of political action like ‘bandh’ or ‘hartal’, ‘rasta roko’, ‘rail roko’ or ‘jail bharo’ in support of public causes can also be declared as an organisation of political nature, according to the guideline prescribed in Rule 3 (vi).”

[Indian Social Action Forum v. Union of India, Civil Appeal No.1510 of 2020, decided on 06.03.2020]