Suspension of FCRA Approval

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Recently, the Delhi High Court permitted the Centre to submit certain information in connection with a petition by the Commonwealth Human Rights Initiative (CHRI) for suspending its registration for 180 days for alleged violations of the Foreign Contribution (Regulation) Act (FCRA).

Issues Highlighted by the Plea 

• According to the CHRI’s counsel, the suspension order is contrary to the framework of the scheme set out under the Act and even the suspension was passed without initiating any inquiry and is liable to be set aside.
  • The suspension order was “unreasonable, manifestly arbitrary, excessive and disproportionate.
  • The suspension order has “completely paralysed” its functioning, “threatens the livelihood of its employees and casts a stigma on its reputation”.

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.
• It falls under the purview of the Ministry of Home Affairs (MHA).
• Objective: To prevent the use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.
• 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.
• 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.

Issues related to FCRA

• It prohibits the receipt of foreign contribution “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. 

Source: TH