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EXPLAINED: What Is FCRA, And How Nod To Receive Foreign Funds Can Be Rejected Under It

The FCRA registration of the Missionaries of Charity has been cancelled, reports said. (Image: AFP)

The FCRA registration of the Missionaries of Charity has been cancelled, reports said. (Image: AFP)

The FCRA registration of close to 6,000 entities has been cancelled by the Centre, including the likes of the Missionaries of Charity and Oxfam India

The registration of nearly 6,000 organisations and entities, including the likes of the Missionaries of Charity, Oxfam India and the Indian Medical Association (IMA), were either rejected or deemed to have lapsed under the Foreign Contribution (Regulation) Act (FCRA), leaving them unable to receive funds from abroad. Government officials say that the majority of these outfits failed to apply for renewal of their licences while it has been alleged that withholding permission under FCRA is a ploy used to harass outfits that are critical of the Centre.

How Many Organisations Have Lost Their FCRA Registration?

Reports said that the registration of 5,933 NGOs under FCRA lapsed on December 31, 2021, over either their failure to apply for renewal before the due date or the rejection of their application by the Ministry of Home Affairs (MHA). While 5,789 NGOs lost their registration for non-application, the remaining ones were denied permission after the Union home ministry ruled that they had violated the provisions of FCRA.

The ministry said that it has been awarding extensions on FCRA registrations amid the pandemic and in view of amendments introduced in the Act in 2020, which have hampered the processing of renewal applications. An extension was granted until May 31, 2021, to NGOs whose registration was lapsing on September 29, 2020. Then, the permit was extended to September 30, 2021, with another relaxation being given till December 31, 2021.

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The ministry has now offered a fresh extension, till March 31, 2022, but only for those NGOs who had applied for renewal before their registration expired. As to the entities that did not apply for renewal before the expiry of their registration, their registration is deemed to have ended.

What Have These Organisations Said?

Oxfam India — reported to be among the entities whose licence had expired — said its FCRA renewal request had been denied by the Union home ministry and that then decision would adversely affect its humanitarian work. “As per the list released by the Ministry of Home Affairs on January 1, 2022, Oxfam India’s FCRA registration renewal request has been denied… which means that Oxfam India will not be able to receive foreign funds for any of its work in India (effective immediately)," the group said.

Earlier, reports had said that the registration of the Missionaries of Charity, founded by Mother Teresa, was cancelled over “adverse inputs". The decision is said to have come after a police complaint was reportedly filed in Gujarat against the director of a children’s home run by it for allegedly attempting to convert young girls. The ministry said it had not received a request for a review of its decision with Missionaries of Charity saying that they had “asked our centres not to operate any of the FC (foreign contributions) accounts until the matter is resolved".

What Is FCRA?

According to the FCRA website, the FCRA 2010 — it replaced an earlier Act passed in 1976 — was brought in by Parliament to consolidate the laws aimed at regulating and prohibiting “the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies". It also aims to “prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to national interest".

The provisions of the Act apply to the territory of India, to citizens of India who may be outside India and to companies or their branches outside India that are registered or incorporated in India. The entities covered by the Act include an individual, a Hindu undivided family, an association, or a registered company.

It says that any entity, or “person", can receive foreign funds as long as it has “a definite cultural, economic, educational, religious or social programme" and has obtained a nod under FCRA rules from the Centre, among other things.

In the statement of objects and reasons for amendments introduced in 2020 in FCRA, the Centre said that it had found that while “the annual inflow of foreign contribution has almost doubled between the years 2010 and 2019… 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".

It had pointed out then that violations had led the ministry to cancel the registration of more than 19,000 recipient organisations, including NGOs, between 2011 and 2019 with criminal inquiries having had to be taken up against “dozens of such NGOs which indulged in outright misappropriation or mis-utilisation of foreign contribution".

What Is A Foreign Contribution Under FCRA?

“Foreign contribution" under FCRA covers any “donation, delivery or transfer made by any foreign source… of any article" as long as it is not given as a gift for personal use, or if its market value in India at the time it was made is “not more than such sum as may be specified from time to time by the Central government".

Any currency, or security can fall under the ambit of the Act though it excludes any money received “by way of fee… or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India".

Neither are donations made by Non-Resident Indians (NRIs) considered to be “foreign contribution" although a donation from a person of Indian origin who has assumed foreign nationality is treated as as “foreign contribution".

Who Cannot Receive Foreign Contribution?

A host of entities are barred from receiving foreign funds, including election candidates, those connected with a

registered newspaper, judges, government servants or employees of any entity controlled or owned by the government and members of any legislature. Political parties and their office bearers, too, are prohibited from receiving foreign funds.

When Can FCRA Registration Be Suspended?

Requirements mandated for entities under FCRA cover an audit of accounts and inspection and verification of their on-field activities.

The Union home ministry says there are two ways in which an organisation can receive clearance to obtain foreign funds, via registration, or by seeking “prior permission". For securing registration, an entity should be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882, etc. Such an organisation should “normally be in existence for at least three years" and have undertaken “reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised".

An entity may also seek prior permission under FCRA, which is “granted for receipt of a specific amount from a specific donor for carrying out specific activities/projects". But even in this case, a key requirement is for it to be “registered under an existing statute".

The Centre can cancel the FCRA registration granted to an entity following which it is rendered ineligible for registration or grant of prior permission for a period of three years. It may also suspend the registration for a period that cannot exceed more than 180 days. An entity whose registration has been suspended cannot receive any foreign funds during the said period or use any unutilised foreign funds that it may hold without the permission of the Centre.

Among the key stipulations for an entity that has received an FCRA nod is the filing of “mandatory annual return… till the amount of foreign contribution is fully utilised". Failure to file annual returns can led to the slapping of a penalty for late submission of return, or cancellation of FCRA registration.

An entity is also mandated to not transfer FCRA funds to any other person or entity “unless such other person is also registered and had been granted the certificate or obtained the prior permission under this Act".

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first published:January 03, 2022, 14:52 IST