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NGOs and their right to foreign funds

  • IASbaba
  • October 22, 2021
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NGOs and their right to foreign funds

Part of: Prelims and GS II – Polity, law, fundamental rights, NGOs 

Context The Centre has told the Supreme Court that NGOs have no fundamental right to receive uncontrolled foreign contributions without regulations.

  • The Centre said the amendments were meant to ensure that foreign funds were not used to impinge upon the functioning of parliamentary institutions, political associations and other organisations in India.
  • It was responding to petitions challenging amendments made in the Foreign Contributions Regulations law in 2020. 

The background 

  • The petitions had argued that the amendments severely restricted the use of foreign funds by the NGOs for their activities. 
  • They found it cumbersome that the new law expected 23,000 NGOs to open accounts in the main branch of the State Bank of India (SBI) in the capital to receive their foreign funds.

What is Foreign Contribution (Regulation) Act (FCRA)?

  • Foreign funding of persons in India is regulated under FCRA Act and is implemented by the Ministry of Home Affairs.
  • The Act ensures that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained.
  • Registered NGOs can receive foreign contributions for five purposes — social, educational, religious, economic and cultural.

Foreign Contribution (Regulation) Amendment Act, 2020

  • Prohibition to accept foreign contribution: The Act bars public servants from receiving foreign contributions.
  • Transfer of foreign contribution: The Act prohibits the transfer of foreign contribution to any other person not registered to accept foreign contributions.
  • Aadhaar for registration: The Act makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
  • FCRA account: Foreign contribution must be received only in an account designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi.
  • Reduction in use of foreign contribution for administrative purposes: Not more than 20% of the total foreign funds received could be defrayed for administrative expenses. In FCRA 2010 the limit was 50%.
  • Surrender of certificate: The Act allows the central government to permit a person to surrender their registration certificate.

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