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Lok Sabha passes Foreign Regulation (Amendment) Bill, 2020

The Foreign Contribution (Regulation) Amendment Bill, 2020 seeks to bar public servants from receiving foreign funding and to make Aadhar mandatory for all the office bearers of NGOs or other organisations who have been seeking foreign contributions.

Sep 22, 2020 13:04 IST
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The Lok Sabha on September 21, 2020, passed the Foreign Contribution (Regulation) Amendment Bill, 2020 that seeks to streamline the provisions of the Foreign Contribution (Regulation) Act, 2010 by enhancing transparency and accountability in the receipt and utilization of the foreign contribution. 

The Minister of State for Home, Nityanand Rai while replying to the debate in Lok Sabha stated that the amendment bill will stop the misuse of money. He also rejected the criticism of opposition members that it targets minorities and has few unnecessary provisions. 

The amendments in the act seek to bar public servants from receiving foreign funding. It also aims at making Aadhar mandatory for all the office bearers of NGOs or other organisations who have been seeking foreign contributions.

The bill in Lok Sabha seeks on limiting the foreign funds received under FCRA for administrative purposes from the current limit of 50% to 20%.

What does the latest amendment bill states?

The bill to amend the Foreign Contribution (Regulation) Act, 2010 aims at including the public servants and public corporations that are owned and controlled by the government among the list of the entities who will not be eligible to receive funding from abroad.

The bill also states that the Aadhar number of the office bearers of the NGOs will be mandatory for the registration. It further states that not more than 20% of foreign funds can be spent on administrative expenses. Presently the limit is 50 percent.

As per the government, the amendments aim to streamline the provisions of FCRA by enhancing transparency and accountability and strengthening the compliance mechanism in the receipt and utilisation of the foreign contributions that are worth thousands of crores every year.

What will change as the bill is passed?

As the bill has been passed, no organisation will now able to transfer foreign contributions to any person/association under Section 7 of FCRA. The bill now empowers the government to ask a violator to not use the funds by holding a ‘summary inquiry’.

According to the amendment, every person who has been granted the certificate or the prior permission for the foreign funding will receive the foreign contribution only in an account that will be designated as an ‘FCRA’ account which will be opened by him in State Bank of India branch at New Delhi, as the government may specify, by notification.

Why the government has proposed the FCRA amendment bill?

The proposed amendment by the central government stated that the annual inflow of the foreign contribution has almost doubled between 2010 and 2019 but the contributions have not been utilised by the recipients for which they were registered or were granted prior permission under Foreign Contribution Regulations Act (FCRA). Many of them have been found wanting in ensuring basic statutory compliances such as maintenance of proper accounts and the submission of annual returns.

It further states that it has led to a situation where centre had to cancel the certificates of registration of more than 19,000 recipient organisations, which also includes non-governmental, between 2011 and 2019.

About Foreign Contribution Regulations Act:

On May 1, 2011, the act came into force to regulate the acceptance and utilization of the foreign contributions or hospitality by certain associations, individuals, or companies and to prohibit the utilisation and acceptance of foreign hospitality or contribution for any activities that are detrimental to National interest.

The act has been amended twice since it came into force. The first amendment in the act was made by Section 236 of the Finance Act, 2016, and the second one was made by Section 220 of the Finance Act, 2018.

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