Foreign Contribution Regulation amendment Act (FCRA), 2020
The Foreign Contribution (Regulation) Amendment Bill, 2020 amends the Foreign Contribution (Regulation) Act, 2010. The Act regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.
History of Foreign Contribution Regulation (Amendment) Act, 2020
The Foreign Contribution Regulation Act (FCRA) was first brought in by the Indira Gandhi government during the Emergency in 1976. Its aim was to protect the ‘sovereignty’ of India from ‘foreign hands’ at a time when global powers were engaged in a cold war. The law prohibited political parties, electoral candidates and even cartoonists from accepting foreign contributions. In 2010, the government made the renewal of registrations mandatory every five years and placed a 50% limit on administrative expenses.
Key provisions of Foreign Contribution Regulation (Amendment) Act, 2020
- Prohibition to accept foreign contribution: Under the Act, certain persons are prohibited to accept any foreign contribution. These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
- Transfer of foreign contribution: Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution).
- Aadhaar for registration: The Act states that a person may accept foreign contribution if they have: (i) obtained a certificate of registration from central government, or (ii) not registered, but obtained prior permission from the government to accept foreign contribution.
- FCRA account: Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them. However, they may open more accounts in other banks for utilisation of the contribution.
- Restriction in utilisation of foreign contribution: Under the Act, if a person accepting foreign contribution is found guilty of violating any provisions of the Act or the Foreign Contribution (Regulation) Act, 1976, the unutilised or unreceived foreign contribution may be utilised or received, only with the prior approval of the central government.
- Renewal of license: Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration. The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application: (i) is not fictitious or benami, (ii) has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion, and (iii) has not been found guilty of diversion or misutilisation of funds, among others conditions.
- Reduction in use of foreign contribution for administrative purposes: Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses. The Bill reduces this limit to 20%.
- Surrender of certificate: The Bill adds a provision allowing the central government to permit a person to surrender their registration certificate. The government may do so if, post an inquiry, it is satisfied that such person has not contravened any provisions of the Act, and the management of its foreign contribution (and related assets) has been vested in an authority prescribed by the government.
- Suspension of registration: Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days. The Bill adds that such suspension may be extended up to an additional 180 days.
