Restoration of the FCRA registration of Missionaries

In News 

• Recently, the Ministry of Home Affairs (MHA) restored the FCRA registration of Missionaries of Charity (MoC)
  • MoC is the Catholic religious congregation set up by Nobel laureate Mother Teresa  in 1950 
  • The new FCRA certificate will be valid till the end of 2026.

Background 

• Earlier the MHA had refused to renew the NGO’s FCRA registration after it had received some “adverse inputs” and for not meeting the eligibility conditions under FCRA 2010 and Foreign Contribution Regulation Rules (FCRR) 2011”.
  •  It mentioned that “no request/revision application” was received from MoC for the refusal of the renewal. 
• According to the Ministry of Home Affairs (MHA), there are 16,908 active or alive FCRA organisations in the country, and MoC is one of them.

About the Foreign Contribution (Regulation) Act (FCRA)

• It was first enacted in 1976 and was amended in 2010 and 2020.
• It is a law enacted by Parliament to regulate foreign contributions (especially monetary donations) provided by certain individuals or associations to NGOs and other organizations within India.
• Under the Act, the recipients of contributions need to adhere to the stated purpose for which such contribution has been obtained.
• It falls under the purview of the Ministry of Home Affairs (MHA).

Features 

• It is applicable to all associations, groups and NGOs which intend to receive foreign donations.
  • It is mandatory for all such NGOs to register themselves under the FCRA.
• The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.
• Registered associations can receive foreign contributions for social, educational, religious, economic and cultural purposes.
• Filing of annual returns, on the lines of Income Tax, is compulsory.
• Exemption: Section 50 of the Act allows the Central government to issue orders exempting any organisation (apart from political parties) from the provisions of FCRA if it feels it necessary or expedient in the public interest, subject to conditions specified in the order.

Objective:

•  To prevent the use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.

Latest Amendments:

• In 2019, the MHA amended FCRA rules where it said that even persons prohibited to receive foreign funds such as journalists, politicians, members of the judiciary “are allowed to accept foreign contributions from their relatives” if the amount does not exceed Rs. 1 lakh.
  • MHA needs to be informed for any such transaction above Rs. 1 lakh.

• In September 2020, Section 17 of the Act was amended and a new provision was inserted.

• It made it mandatory for all NGOs to receive foreign funds in a designated bank account at the New Delhi branch of the State Bank of India.
• Also, the deadline for applying for opening such an account was 1st April 2021.

• In January 2021, MHA laid down new guidelines for banks on FCRA rules.
  • Donations are given in Indian rupees (INR) by any foreigner/foreign source including foreigners of Indian origin like Overseas Citizen of India (OCI) or Persons Of Indian Origin (PIO) cardholders should also be treated as foreign contributions.
  • Foreign contribution has to be received only through banking channels and it has to be accounted for in the prescribed manner.
  • Any violation by the NGO or by the bank may invite penal provisions of The FCRA, 2010.

• NGOs have to inform the Ministry about suspicious activities of any donor or recipient and take due diligence of its employees at the time of recruitment.

When is a registration suspended or cancelled?

• The MHA: on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
  • The MHA can cancel the registration of an organization that will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.
• 25% of the amount available: Until a decision is taken, the association cannot receive any fresh donation and cannot utilize more than 25% of the amount available in the designated bank account without the permission of the MHA.

What is the criticism against the amendments?

• NGOs questioning the law consider the prohibition on transfer arbitrary and too heavy a restriction.
  •  One of its consequences is that recipients cannot fund other organisations. 

• Lawyers have argued that there is no rational link between designating a particular branch of a bank with the objective of preserving national interest. 
• It is also inconvenient as the NGOs might be operating elsewhere. 
• It prohibits the receipt of foreign contributions “for any activities detrimental to the national interest”. 
  • The government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state”.
  • However, there is no clear guidance on what constitutes “public interest”. 
• The restrictions also have serious consequences on both the rights to free speech and freedom of association under Articles 19(1)(a) and 19(1)(c) of the Constitution. 
  • Freedom is based on the idea that individuals can form voluntary groups and pursue various interests. 
• They have also cited the recent Supreme Court judgment on the alleged use of Pegasus spyware to argue that ‘national security cannot be cited as a reason without adequate justification.

Governments Stand 

• The Government has contended that the amendments were necessary to prevent foreign state and non-state actors from interfering with the country’s polity and internal matters. 
• The changes are also needed to prevent malpractices by NGOs and the diversion of foreign funds. Preventing the possible diversion of funds is also the reason cited for reducing the administrative expense component, as some organisations tended to inflate the actual expenditure incurred.
• The provision of having one designated bank for receiving foreign funds is aimed at making it easier to monitor the flow of funds. 
• The Government clarified that there was no need for anyone to come to Delhi to open the account as it can be done remotely.

Source: TH