Foreign Contribution Regulation Act (FCRA) : Features, Need & Amendments

By K Balaji|Updated : November 24th, 2022

FCRA or Foreign Contribution Regulation Act, 2010 unifies the laws governing the recognition and usage of overseas contributions and foreign hospitality from specific people, associations, or businesses. FCRA also outlaws the acceptance and usage of these resources from any activities that are harmful to the national interest or for matters that are related to or incidental to those activities. The Ministry of Home Affairs implements the FCRA Act.

Recently, the MHA cancelled the FCRA Registration of various NGOs pending investigation. All NGOs and associations must be registered with FCRA to receive foreign funds. This article covers all about Foreign Contribution Regulation Act which is important from the UPSC exam perspective.

Table of Content

What is FCRA?

FCRA or Foreign Contribution Regulation Act controls foreign funding or donations and ensures they don’t compromise the nation‘s domestic security. The act, which was initially passed in 1976, was revised in 2010 and then amended again in 2020. Companies or other legal entities formed or Inc in India that have associated branches or affiliations outside India or are subject to the Act’s regulations.

  • The foreign contribution and hospitality regulation act FCRA was passed on March 31, 1976, to regulate how individuals and organizations use foreign contributions and hospitality while upholding the principles of an autonomous, democratic republic.
  • To secure stringent control over non-profit organizations and political groupings that accepted foreign funds, the FCRA was enacted in 1976.
  • The act was amended in 1984 to mandate that all voluntary organizations register with the Home Ministry.
  • The law was repealed in 2010 and replaced with a new one with stricter regulations.

Download FCRA UPSC Notes

Features of Foreign Contribution Regulation Act

The FCRA lays down a framework that is to be followed regarding international contributions:

  • Any associations, groups, or NGOs that wish to obtain foreign donations or funding must obey the guidelines underlined by the FCRA Act. All these NGOs are required by law to register with the FCRA.
  • The registration can be renewed after the initial five-year period if all requirements are met. For economic, social, educational, religious, and artistic goals, registered groups are permitted to accept donations from outside.
  • It is required to file orders and returns similar to those for income tax; the MHA published new regulations in 2015 that required NGOs to certify that accepting foreign funding would not adversely damage India’s integrity and sovereignty, or its amicable relations with other states, or cause racial unrest.
  • Additionally, it stated that to provide security agencies with access in real-time, all such voluntary organizations would need to maintain accounts in national or private banks that provide core banking facilities.
  • It is forbidden for legislators, political party members, government employees, judges, and media members to accept any foreign contributions.

What is the Need for FCRA?

“National interest and other matters associated or incidental thereto” was the initial goal of the FCRA. The legitimacy of other legal provisions, such as the Companies Act of 2013 and the Companies Rules of 2014, is used to interpret the clause. The FCRA is required for the financial concerns related to NGOs and their projects to be transparent and accountable.

The FRCA Act aims to harmonize several programs that allow these voluntary organizations to protect fundamental rights, the environment or the planet, and public health on task orientation and the general public's interest. For the regulation of foreign contributions and foreign hospitality, as well as for

  • Sovereign rights and integrity of the country
  • The interest of the public
  • Freedom of election of any legislature
  • Relations with the foreign State
  • Peaceful coexistence amongst religious, social, linguistic, or regional groups, caste, and communities.

FCRA Registration

Under the FCRA Act, NGOs and other organizations must register every 5 years. The foreign contributions can be received for these five objectives:

  1. Social
  2. Educational
  3. Religious
  4. Economic
  5. Cultural

The term “national interest'' can refer to the defence of social, economic, and community values, including educational, cultural, and religious ones. Whereas the term “foreign contribution” refers to the gift, delivery, or transfer of any goods, currency (whether Indian or foreign) or security made by a foreign source.

Amendments to FCRA Act

FCRA 1976

As we already discussed, the foreign contribution and hospitality regulation act FCRA was passed on March 31, 1976, to regulate how individuals and organizations use foreign contributions and hospitality while upholding the principles of an autonomous, democratic republic. To secure stringent control over non-profit organizations and political groupings that accepted foreign funds, the FCRA was enacted in 1976.

FCRA 2010

Under FCRA 2010, individuals can collect contributions from abroad without the ministry of home affairs' approval. However, the maximum amount accepted in these international transactions in monetary terms is less than Rs.25,000. The act ensures that the receivers of foreign donations follow the objectives stated in the act.

FCRA Amendment 2020

The following are the major rules laid out in the FCRA 2020:

  • The act prohibited public employees or servants from accepting donations from abroad.
  • According to the FCRA Act, you cannot give a foreign donation to someone who isn’t authorized to accept them.
  • All office holders, directors, or key employees of a person receiving the foreign contribution or required to have an Aadhaar number as an identification document.
  • According to the act, State Bank of India branches in New Delhi may only accept foreign donations in accounts designated by the banks as FCRA accounts.
  • According to the act, a maximum of 20% of the foreign funds received may be used to cover administrative costs.
  • Under the act, the central government may allow a person to renounce their registration certificate.

Issues relating FCRA

  • Prohibition in the receivable of any foreign contributions, donations, or funding may be considered detrimental to the nation's interest.
  • Refusal on the grounds of finding any donation to a non-governmental organization negatively impacts the nation's economic interest.
  • Here no transparent guidelines are provided regarding what favours the “interest of the nation.”
  • It also affects the right to free speech and freedom of association provided to us in Article 19(1)(A) and Article 19(1)(C) of the Indian constitution.
  • The provisions were overly ambiguous and offered the state ample discretion to apply the clause any way it saw fit.

FCRA UPSC

The FCRA is a very crucial topic for the UPSC Syllabus GS Paper 2. It is very important to keep in sync with the current affairs and news, along with the study material provided, to learn about all the updates regarding the FCRA. You can also download the UPSC previous year's question papers for practice. For comprehensive preparation, applicants can also refer to UPSC Books to cover all related topics.

FCRA UPSC Questions

Question: Read the following statements regarding the FCRA 2020:

  1. The FCRA prohibits public servants from receiving any foreign donations.
  2. Foreign donations can only be received in a bank account listed in the FCRA accounts listed by the State bank of India, New Delhi.
  3. Any citizen is permitted to obtain foreign donations without any permission from the Ministry of home affairs.

Choose the correct statement:

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. All of the above.

Answer: (A) 1 and 2 only.

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FAQs on FCRA Act

  • The Foreign Contribution (Regulation) Act (FCRA), 2010 unifies the laws governing the recognition and usage of overseas contributions and foreign hospitality from specific people, associations, or businesses. It also outlaws the acceptance and usage of these resources from any activities that are harmful to the national interest or for matters that are related to or incidental to those activities.

  • The following individuals are not eligible to receive a foreign contribution:

    1. A candidate running in elections
    2. Editors, publishers, or cartoon artists of a licensed newspaper
    3. Employees of any organization or the government servants
    4. Legislation members
    5. Political organizations
  • Under the FCRA 2010, people can collect contributions from abroad without the ministry of home affairs' approval. However, the maximum amount accepted in these international transactions in monetary terms is less than Rs.25,000. The act ensures that the receivers of foreign donations follow the objectives stated in the act.

  • The FCRA affects the right to free speech and freedom of association provided to us in Article 19(1)(A) and Article 19(1)(C) of the Indian constitution.

  • The role of FCRA was to maintain strict control over voluntary organisations and associations that got funding from foreign. In 1984 an amendment was made in which the Act required all non-governmental organizations to register with the home ministry.

  • Organizations seeking foreign contributions for social, educational, cultural, or religious programs can get FCRA registration.

  • The FCRA new rule says that the Indians can receive up to 10Lakh in a year from relatives who stay abroad without informing the authorities.

  • FCRA restricts the receipt of foreign funds by the candidates for newspapers, elections, media broadcast companies, government servants, members of political parties, organizations of a political nature,

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