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Amidst strong opposition in the current Parliament session, both Houses of Parliament passed the Foreign Contribution (Regulation) Amendment Bill, 2020. After getting the assent of the President, the Bill will impose the following restrictions on NGOs:

  1. Currently, FCRA registered NGOs can make sub-grants (of foreign contributions) to other FCRA registered NGOs. The Bill proposes to prohibit sub-grant of foreign funding altogether.
  2. At present, registered organisations can use 50% of foreign contribution for administrative expenses in a financial year. The Bill proposes to reduce the limit of administrative expenses from the existing 50% to 20%.
  3. At present, FCRA approved organisations have a designated FCRA account in one of the 62 pre-approved banks including Standard Chartered Bank, HSBC, HDFC Bank, ICICI Bank, Deutsche Bank, and Citibank. It is proposed to only allow foreign grants to be deposited into an FCRA designated account opened with such a branch of State Bank of India at New Delhi as the Central Government may notify.
  4. Aadhaar numbers will be a mandatory requirement for all office-bearers. Aadhaar card number is a 12-digit random number issued by the Unique Identification Authority of India to the residents of India after satisfying the verification process laid down by the Authority. The verification process includes biometric scans. In the case of a foreigner, the option is given to submit a copy of the passport or an OCI (Overseas Citizen of India) card instead.
  5. The Bill aims to give the power to the Ministry of Home Affairs (MHA) to put licenses under suspension for as much time as they wish to without actually cancelling it. Earlier, MHA could suspend a license for a maximum period of 180 days.
  6. The Bill proposes to prohibit ‘public servants’ or any organisation that is “controlled or owned” by the government from accepting foreign contributions. ‘Public servant’ has been defined as a government employee, officers in the military, navy or air force; police, judges, officers of Court of Justice, and any local authority established by a Central or State Act.
  7. FCRA registered organisations will be allowed to surrender their license after an inquiry on the functioning of such an organisation.

The Bill has received strong criticism and backlash from the Opposition and NGO sector at large. The administrative expense limit of 20% might severely impact or altogether starve small NGOs who provide support work on large projects. At a time like this when the country is battling with COVID-19, the amendments put the support of the non-profit sector at the question.

Click here to read the complete proposed Foreign Contribution (Regulation) Amendment Bill 2020.

Last updated on September 23, 2020.

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