SC upheld the constitutional validity of the Foreign Contribution (Regulation) Amendment Act (FCRA), 2020.
It held that receiving foreign donations cannot be an absolute right and can be regulated by the Parliament.
Registration under Foreign Contribution (Regulation) Act (FCRA) is mandatory for any NGO or association to receive foreign funds and it is renewed every five years.
Foreign Contribution Regulation Act (FCRA), 1976FCRA-1976 was enacted with an aim to regulate the utilization of foreign contributions/hospitality by individuals, associations to keep it consistent with the values of a sovereign, democratic republic.
In 1984, an amendment was made to the act requiring all the Non Governmental Organisations (NGOs) to register themselves with the Home Ministry.
The act was repealed in 2010 and a new act with strict provisions was enacted.
Foreign Contribution Regulation Act (FCRA), 2010It is designed to correct shortfalls in the predecessor act of 1976.
FCRA-2010 seeks to regulate foreign contributions or donations and hospitality (air travel, hotel accommodation etc) to Indian organizations and individuals and to stop such contributions which might damage the "national interest".
Registered NGOs can receive foreign contribution for five purposes - social, educational, religious, economic and cultural.
Since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the purview of the Home Ministry and not the Reserve Bank of India (RBI).
As per the act, a separate account needs to be maintained by the organisations to deposit the Foreign Contributions received and no other funds except for Foreign Contributions shall be deposited in that account.
The registration certificate granted to the NGOs under the 2010 act comes with five-year validity.
The act empowers the Home Ministry to cancel the registrations of NGOs if it believes that the organisation is "political" and not neutral.
The act makes every bank to report to the prescribed authority, the amount of foreign remittances received and other related details such as the source, manner of receipt etc.
FCRA Amendment Bill 2020The latest amendment (2020) to the Act inserted a new provision that makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the SBI's New Delhi branch and the accounts were to be opened by March 31.
Any other bank account can be linked to the main account but all foreign donations should be received in the SBI account.
The amendment act, 2020 also made Aadhaar a mandatory identification document for all the office bearers, directors and other key functionaries of an NGO and capped the administrative expenses at 20 per cent of the foreign funds received.
The amendment also barred sub-granting by NGOs to smaller NGOs who work at the grassroots.
It also grants the government powers to stop utilisation of foreign funds by an organisation through a "summary enquiry".
The bill aims at strengthening the compliance mechanism and enhancing transparency and accountability in receiving and utilisation of foreign contributions and facilitating genuine non-governmental organisations or associations who are working for the welfare of the society.