Govt. releases new guidelines for banks under “Foreign Contribution (Regulation) Act”
Recently the centre has announced new guidelines for banks, under the Foreign Contribution (Regulation) Act. These guidelines are related to the donations received by non-governmental organizations (NGOs) and associations.
What are the new FCRA guidelines?
- The new rules are a follow-up on the amendments to the FCRA that were passed in the last session of Parliament. In the newly notified rules, the Centre has made an insertion on Rule Nine (obtaining registration or prior permission to receive foreign funds), making the process more cumbersome for organisations.
- The donations received in Indian rupees by the NGOs and associations from any foreign source should be treated as a foreign contribution. Even if that source is located in India at the time of such donation.
- It will include the contributions by foreigners of Indian origin like OCI or PIO cardholders, in Indian rupees(INR).
- As per the existing rules, Banks need to report any receipt or utilization of any foreign contribution, by any NGO, association, or person. Banks should submit these reports to the Central government within 48 hours.
- Rules cover all NGOs, whether they are registered or granted prior permission under the FCRA.
- Any violation by the NGO or by the bank of these rules of FCRA may invite penal provisions under the FCRA Act, 2010.
Foreign Contribution (Regulation) Act:
- The Foreign Contribution (regulation) Act, 2010 is an act of the Parliament of India, by the 42nd Act of 2010.
- FCRA was enacted in 1976 and amended in 2010. It regulates foreign donations and ensures that such contributions do not adversely affect internal security.
- It is applicable to all associations, groups, and NGOs which intend to receive foreign donations.
- Members of the legislature and political parties, government officials, judges, and media persons are prohibited from receiving any foreign contribution.
- However, in 2017 the FCRA was amended through the Finance Bill. This amendment allowed political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company, in which an Indian holds 50% or more shares.
- 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.
- In September 2020, the FCRA Act was amended by Parliament and a new provision was added. It makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the State Bank of India (SBI) New Delhi branch.
