Foreign Contribution Regulation Amendment Bill 2020

Foreign Contribution Regulation Amendment Bill 2020

  • The Foreign Contribution (Regulation) Amendment Bill, 2020 amends the Foreign Contribution (Regulation) Act, 2010.
  • The Act regulates the acceptance and utilization of foreign contribution by individuals, associations, and companies.
  • Foreign contribution is the donation or transfer of any currency, security, or article by a foreign source.
Foreign Contribution Regulation

Provisions of the Act

  • Under the act, certain persons are prohibited to accept any foreign contributions. These are:
    • Election candidates
    • Editor or publisher of a newspaper
    • Judges
    • Government servants
    • Members of any legislature and political parties
  • The bill also adds public servants (as defined under the Indian Penal Code) to this list.
  • Public servant includes any person who is in the service or pay of the government, or remunerated by the government for the performance of any public duty.
  • Under the act, foreign contribution cannot be transferred to any other person unless such person is registered to accept foreign contribution. The bill amends this to prohibit the transfer of foreign contribution to any other person.
  • The term person includes:
    • An individual
    • An association
    • A registered company
  • The Act states that a person may accept foreign contribution if they have
    • Obtained a certificate of registration from central government
    • Not registered, but obtained prior permission from the government to accept foreign contribution
  • Now, the bill has added that a person seeking registration or renewal of registration must provide Aadhaar number of all its office bearers, directors, or key functionaries, as an identification document.
  • In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.
  • Under the Act, a registered person must accept foreign contribution only in a single branch of the scheduled bank specified by them. However, they may open more accounts in other banks for utilization of the contribution.
  • The Bill amends this to state that foreign contribution must be received only in an account designated by the banks as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government.
  • No funds other than foreign contributions should be received or deposited in this account.
  • The person may open another FCRA account in any scheduled bank of their choice for keeping or utilizing the received contribution.
  • Under the Act, if a person accepting foreign contribution is found guilty of violating any provisions of the Act or the Foreign Contribution (Regulation) Act, 1976, the unutilized or unreceived foreign contribution may be utilized or received, only with the prior approval of the central government.
  • The Bill adds that the government may also restrict usage of unutilized foreign contributions for persons who have been granted prior permission to receive such contributions.
  • It can be done, if based on a summary inquiry, and pending any further inquiry, the government believes that such person has contravened provisions of the Act.
  • The Bill provides that an inquiry must be conducted before renewing the certificate to ensure that the person making the application
    • Is not fictitious or benami
    • Has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversions
    • Has not been found guilty of diversion or misutilization of funds, among other conditions.
  • Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received.
  • They must not use more than 50% of the contribution for meeting administrative expenses. This Bill reduces the limit to 20% .
  • The Bill adds the provision allowing the central government to permit a person to surrender their registration certificate.
  • Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days. The Bill adds that such suspension may be extended up to an additional 180 days.

Examrace Team at Aug 23, 2021