Home Ministry relaxes FCRA account norms for NGOs: What are FCRA norms? Get all details here

The MHA stated in its 5-page order that the FCRA account holder shall have complete freedom to transfer the foreign contribution received in their SBI FCRA Account to another FCRA Account.

Created On: Nov 24, 2020 13:30 IST
FCRA norms
FCRA norms

The Union Ministry of Home Affairs has relaxed the norms for the NGOs mandated to maintain FCRA account under the Foreign Contribution Regulation Act (FCRA) with the State Bank of India. 

The MHA stated in its 5-page order that the FCRA account holder shall have complete freedom to transfer the foreign contribution received in their SBI FCRA Account to another FCRA Account.

The order further stated that the main SBI branch in New Delhi will not levy any charge or fees for such transfers. The bank will also be required to inform the FCRA account holder immediately about each such transfer through an email and SMS. 

Key Highlights 

The Home Ministry has set March 31, 2021 as the deadline for the NGOs registered to open an account at the specified branch of SBI. 

The MHA order also stated that no inward remittance will be allowed in any account other than the FCRA account opened in SBI main branch in New Delhi from the date of opening the FCRA account or from March 31, 2021 whichever is earlier. 

The Ministry has, however, allowed the NGOs to maintain their existing FCRA Accounts for keeping or utilization purposes.

Further, the Ministry’s order stated that SBI will allow receipt of foreign contribution only in the “FCRA Account” after confirming that the MHA has already granted a certificate or prior permission.

The SBI main branch in Delhi will be required to obtain the beneficiary name, account number, address and country of residence of donors, besides FCRA account details.

The NGOs getting foreign donations will be required to submit an undertaking, explaining the purpose of the funds as per FEMA declaration and RBI guidelines to the SBI Branch.

What is FCRA?

The Foreign Contribution Regulation Act (FCRA), 2010 regulates foreign donations and ensures that such funds do not affect the internal security of the country.

The FCRA Act was first enacted in 1976 and was amended in the year 2010 when a slew of new measures were taken by the Home Ministry to regulate foreign donations. 

What are FCRA Norms?

The Foreign Contribution Regulation Act applies to all NGOs, associations and groups that seek foreign donations. All such NGOs must register themselves under the FCRA.

The registration will be initially valid for five years, after which it can be renewed if they comply with all the norms. 

The Ministry of Home Affairs (MHA) has asked all NGOs seeking foreign donations to open a designated FCRA account at the main branch of the State Bank of India in New Delhi.  

FCRA Act Amendment 2020 

The FCRA Act 2010 was amended this year on September 29, 2020 after the proposed amendment was cleared by both the houses of the Parliament during the monsoon session. 

Under the 2020 Amendment, the limit of administrative expenses has been reduced from 50 percent to 20 percent.

The amendment also makes it mandatory for the NGOs to provide the Aadhaar number of all its office bearers, directors and other key functionaries. 

If a foreign national is a board member or a member of the NGO, then it has to provide a copy of their passport or Overseas Citizen of India (OCI) card. 

Background

The annual inflow of foreign contribution was recorded to be over Rs 58000 crore between 2016-17 and 2018-19. The amended FCRA act will give the government the power to ask the violator to not use the funds by holding a summary inquiry. Earlier, this was done only after a person or association was found guilty of a violation of the Act. 

The Home Ministry had earlier flagged alleged misuse of foreign donations by several NGOs including Greenpeace, Amnesty International, Teesta Setalvad’s NGO, Citizen for Justice and Peace and Lawyers Collective.

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