The Union Ministry of Home Affairs issued an order on 21 December 2017, directing all non-governmental organisations, business entities and individuals who receive funds from abroad to open accounts in any of the 32 designated banks.
The directive to the NGOs, companies and individuals is aimed at providing a higher level of transparency and hassle-free reporting compliance.
• The NGOs have been directed to comply with the order within one month, latest by 21 January 2018.
• Following this, the organisations or individuals will have to intimate the details of their bank accounts to the ministry by filling the prescribed form.
• The government has also issued a warning to the organisations to ensure that such funds are not utilised for anything that is detrimental to national interests.
• The designated banks include the ones that are integrated with the central government's Public Financial Management System (PFMS).
• The designated banks include one foreign one as well.
The 32 designated banks where individuals, NGOs and other entities can open their accounts include Abu Dhabi Commercial Bank, ICICI Bank, The Cosmos Co-Operative Bank, Bank of Baroda, State Bank of India, South Indian Bank, IDBI Bank, Central Bank of India, Corporation Bank, Karur Vysya Bank, Tamilnad Mercantile Bank Ltd, The Catholic Syrian Bank Ltd, HDFC Bank, UCO Bank, IndusInd Bank Limited, City Union Bank and Syndicate Bank.
The others are Allahabad Bank, The Jammu and Kashmir Bank Ltd, Punjab National Bank, Allahabad UP Gramin Bank, DCB Bank Ltd, Manipur State Co-op Bank, Vijaya Bank, Bombay Mercantile Co-operative Bank Ltd, Yes Bank, Oriental Bank Of Commerce, Dena Bank, Bank of Maharashtra, Canara Bank, Andhra Bank and Axis Bank.
The Foreign Contribution (Regulation) Act 2010 provides for the regulation of acceptance of the foreign funds or foreign hospitality by certain individuals, associations, organisations and companies "to ensure that such contributions or hospitality are not being utilised for the activities detrimental to the national interest”.
The order, therefore, is in line with the powers conferred under the FCRA.
Earlier in 2017, the home ministry had asked around 9,000 NGOs and other entities to open their accounts in banks having core banking facilities and furnish details for real-time access to security agencies in case of any discrepancy.
Between 2011 and 2017, the registrations of around 18,868 NGOs were cancelled for violating laws. Following the action, foreign funding to Indian NGOs came down drastically - from Rs 17,773 crore in 2015-16 to Rs 6,499 crore in 2016-17.
Currently, around 10,000 FCRA-registered NGOs are operating in the country.
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About Public Financial Management System
• The system functions under the Controller General of Accounts in the Ministry of Finance.
• It provides a financial management platform for all plan schemes, a database of all recipient agencies, integration with core banking solution of banks handling plan funds, integration with state treasuries and efficient and effective tracking of fund flow to the lowest level of implementation for plan scheme of the government.
• It also provides information on all plan schemes/ implementation agencies in the country on fund utilisation leading to better monitoring, review and decision support system to enhance public accountability in the implementation of plan schemes.
• Its introduction has resulted in effectiveness and economy in public finance management through better cash management for government transparency in public expenditure and real-time information on resource availability and utilisation across schemes.
• It also resulted in improved programme administration and management, reduction of float in the system, direct payment to beneficiaries and greater transparency and accountability in the use of public funds.
Who: Home Ministry