The Rajya Sabha on Tuesday, 22nd September 2020 passed the “Foreign Contribution (Regulation) Amendment Bill, 2020” to regulate the acceptance and utilization of foreign contributions by individuals, associations and companies.
The Bill was passed unopposed as the Opposition Members had earlier staged a walk out in protest to passing of the Farmers’ Bills.
It amends the Foreign Contribution (Regulation) Act, 2010 to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest.
While introducing the Bill, Mr. Nityanand Rai, MoS Home Minister, said, “Annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilized the same for the purpose for which they were registered or granted prior permission under the said Act. Therefore, there is a need to streamline the provisions of the said Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilization of foreign contribution.”
Earlier, the Bill was passed in the Lok Sabha on September 21, 2020.
SALIENT FEATURES OF THE BILL
Prohibition to accept foreign contribution
The Bill prescribes a prohibition on public servants from accepting any foreign contributions. This prohibition is in addition to the bar placed on election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
Transfer of foreign contribution
The Bill also prescribes a prohibition on the transfer of foreign contributions to any other person be it an individual, association, or a registered company. Thus, sub-granting of foreign funds has been prohibited.
Aadhaar for registration
The Bill lays down that any person seeking Government approval (mandatory for accepting foreign contributions) must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document. In the case of a foreigner, it will be required that they must provide a copy of the passport or the OCI card.
FCRA account
The Bill states that foreign contribution must be ‘received’ only in an account designated by the bank as ‘FCRA account’ in such branch of the State Bank of India, New Delhi, as notified by the central government. It follows that no funds other than the foreign contribution should be received or deposited in this account.
However, another FCRA account may be opened in any scheduled bank for keeping or utilizing the received contribution.
Violation of FCRA
According to the Bill, if a person accepting foreign contribution is found guilty of violating any provisions of the 2010 Act or the Foreign Contribution (Regulation) Act, 1976, the Central Govt may restrict the usage of unutilized foreign contribution. And, wherever the proceedings over suspicion of such violation are pending, the government may suspend the registration of a person for a period not exceeding 180 days, extendable for another 180 days.
Renewal of license
The Bill stipulates that the government may conduct an inquiry before renewing the certificate of registration of a person, to ensure that the person:
- is not fictitious or benami
- has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion
- has not been found guilty of diversion or misutilization of funds, among others conditions.
Reduction in the use of foreign contribution for administrative purposes
The Bill also reduces the cap for utilization of funds for administrative expenses from 50% to 20%.
THE PARLIAMENTARY DEBATE
As the Opposition Members had staged a walk out in protest to passing of the Farmers’ Bills, this Bill was passed unopposed.
Some of the concerns raised in connection to the Bill during debate in Lok Sabha are reiterated herein below:
- The increased Government monitoring will authorize its bureaucratic control over philanthropic organizations. This control may eventually be used to silence their concerns/dissent;
- The mandate of furnishing Aadhar Card details is contrary to the Supreme Court’s verdict in the Puttaswamy Judgment;
- Forbidding sub-granting of foreign funds will ruin small NGOs that largely depend on funds from bigger philanthropic organizations or work in collaboration with big organizations;
- Narrowing the accounts for receiving foreign funds only to SBI, that too only in Delhi, is illogical. It suggests that other banks are incapable of managing such funds and also creates a geographical barrier for the receiver;
- Freezing of the FCRA account for one year, merely on suspicion of misuse for of funds, is not justified;
- It is not logical to limit the administrative expenses of the receiver to a mere 20% as they are required to maintain offices, pay salaries, etc.
Reacting to these concerns in the Lok Sabha, Mr. Rai had reiterated that national & internal security is the main focus of the Bill and he assured the House that the Amendments are not against NGOs but they aim to regulate the utilization of foreign funds for lawful purposes only.
Speaking on the issue of mandating Aadhar Card, he clarified that the Supreme Court has permitted the Government to seek Aadhar details for identification purposes.
Deliberating on the aspect of restricting the receival of funds to SBI, Delhi, he explained that one account needs to be opened in SBI in Delhi so that all money comes in at one place and from there it can be immediately transferred. Nevertheless, this does not mean people cannot open accounts in other banks.
As a matter of fact, the persons concerned may open another FCRA Account in any of the scheduled bank of his choice for the purpose of keeping or utilizing the foreign contribution which has been received from his FCRA Account in the specified branch of State Bank of India at New Delhi.