• 9964432222
  • Mail Us
  • Appointment
  • Locate Us
  • Chat Now
  • Courses
  • Login
  • Register
Manifest IAS
JournalsOfIndia
Advertisement
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
JournalsOfIndia
No Result
View All Result
Home Governance

FCRA & Charter for Banks

February 8, 2021
in Governance
Reading Time: 6 mins read
0
FCRA & Charter for Banks
96
VIEWS
Share on WhatsAppShare on TelegramShare on Facebook
image_pdfMake PDF

With a view to streamlining the procedures and ensuring effective enforcement and compliance, the Foreign Contribution (Regulation) Act, 2010 has been further amended on 28th September, 2020. FCRA is a national & internal security law to ensure that foreign funds don’t affect national interests. The recent charters issued by the Ministry of Home Affairs open up the debate on regulation of foreign funding of civil society organisations. 

In news: The Ministry of Home Affairs (MHA) has laid down a charter for banks
Placing it in syllabus: Governance

Dimensions

  • Main Provisions of the charter 
  • Impact of the charter (Positives and Negatives)

Content:

Main Provisions of the Charter:

  • Banks have been given a very crucial role in ensuring that the provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) and the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011)
  • The Ministry of Home Affairs has laid out a series of guidelines and charter to make the NGOs and the banks comply with the new provisions.

Changes to definition of Foreign Contributions (FC)

  • Donations received in Indian rupees by non-governmental organisations (NGOs) and associations from any foreign source even if that source is located in India at the time of such donation should be treated as “foreign contribution”
  • Donations given in Indian rupees (INR) by any foreigner/foreign source including foreigners of Indian origin like OCI or PIO cardholders should also be treated as foreign contribution.

Utilisation of Foreign Funds

  • All foreign contributions received from any ‘foreign source’ must be necessarily received only in a bank account and must be routed and spent only through bank accounts.
  • All NGOs seeking foreign donations have to open a designated FCRA account at the SBI branch by March 31.
  • The NGOs can retain their existing FCRA account in any other bank but it will have to be mandatorily linked to the SBI branch in New Delhi.
  • The Charter prohibits banks from crediting any foreign contribution to the account of an association unless it produces documentary evidence of having obtained registration/prior permission from the Central Government
  • If any foreign contribution is credited to the account of an Association directly, the bank should not allow utilization of such fund 
  • The bank should ask the association concerned to obtain permission from the government to utilise these funds
  • The bank should inform the Director/ Deputy Secretary (FCRA), Ministry of Home Affairs, Govt. of India, New Delhi about direct receipt of foreign funds.
  • Any asset created with Foreign Contribution  remains as FC asset. Upon disposal of the asset, the sale proceeds should be deposited in the designated FC account.

Penal Provisions

  • Any violation by the NGO or by the bank may invite penal provisions of The FCRA, 2010.
  • RBI is empowered to take appropriate action for non-compliance of the charter by any bank

What is FCRA (Foreign Contribution Regulation Act)?

  • It is an act of Parliament enacted in 1976 and amended in 2010 to regulate foreign donations and to ensure that such contributions do not adversely affect internal security.
  • Coverage: It is applicable to all associations, groups, and NGOs which intend to receive foreign donations.
  • Members of the legislature and political parties, government officials, judges, and media persons are prohibited from receiving any foreign contribution.
  • However, in 2017 the FCRA was amended through the Finance Bill to allow political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.
  • It is mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.
  • Registered associations can receive foreign contributions for social, educational, religious, economic, and cultural purposes. The filing of annual returns on the lines of Income Tax is compulsory.
  • In 2015, the MHA notified new rules which required NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.

Key provisions of FCR (Amendment), Act 2020:

 Prohibition on accepting foreign contribution:

  • Public servant includes any person who is in service or pay of the government or remunerated by the government for the performance of any public duty.
  • Certain public servants in the prohibited category for accepting foreign contribution.They include election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties.

Transfer of foreign contribution and its use: 

  • Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution.
  • The Bill states that foreign contribution must be received only in an account designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi. 
  • No funds other than the foreign contribution should be received or deposited in this account.
  • The Bill gives government powers to stop utilisation of foreign funds by an organization through a “summary enquiry”.

Reduction in use of foreign contribution for administrative purposes: 

  • The bill decreases administrative expenses through foreign funds by an organisation to 20% from 50% earlier.

Impact of the Charter:

Benefits of the Charter

  • Prevention of Misuse of funds: The government  can monitor the use of foreign money is not used for activities that affect India’s internal security. An official report quantifying the GDP losses allegedly caused by environmental NGOs was prepared during the UPA period, indicating a foreign conspiracy against India.
  • Enhancing transparency and accountability of NGOs: The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019. At the same time, much of these funds were not utilised for the purpose for which they were registered or granted prior permission under FCRA.
  • Regulating activities of  NGOs: Many NGOs and associations did not adhere to statutory compliances such as submission of annual returns and maintenance of proper accounts. Through these changes the government has oversight of all funds.

Negative impacts 

  • Over-regulation: New regulations put excessive conditions on NGOs, civil society organizations, and educational and research institutions that have partnerships with foreign entities.
  • Hinders social work: Many NGOs serve extremely disadvantaged sections. New rules restrict their scope of voluntary actions only on presumption of guilt against them.
  • Impinge on Constitutional rights: According to the International Commission of Jurists, the new amendments to FCRA are incompatible with international obligations and India’s own constitutional provisions on rights. The United Nations Human Rights Council resolution on protecting human rights defenders says that no law should criminalize or delegitimize activities in defense of human rights on account of the origin of funding.
  • Restricts flow of investments & technology: As a growing economy, India has been proactive in seeking global capital and technology. Strict rules governing FCRA will impact investments.
  • Selective barriers: The over-regulation appears to be towards selected categories of global ideas and ideals such as environmentalism, human rights, and civil liberties.
  • Costly compliance on cash strapped NGOs: Every FCRA-registered NGO will have to open an FCRA-marked bank account with a designated branch of State Bank of India in New Delhi. Around 93% of FCRA NGOs are registered outside Delhi, and will now have to open a bank account in the capital.
  • Difficulty in paying salaries: The term Administrative Expenses in FCRA rules is defined to include all salaries.  Limiting administrative expenses to 20% of total foreign donations received, will be a major blow to organisations in terms of payment of salaries, professional fees, utility bills, travel and other such expenditure. 

Mould your thought: Discuss the impacts of the Charter for Banks on FCRA by the Ministry of Home Affairs.

Approach to the answer:

  • Introduction
  • Discuss the objective of FCRA
  • Mention the changes made in the Charter
  • Discuss the impacts of this move
  • Conclusion
image_pdfMake PDF
Source: The Hindu
Tags: GS-4MainsNews Paper

Related Posts

Inter-State Council

Inter-State Council

May 26, 2022
BHASHINI – India’s AI led language translation platform

BHASHINI – India’s AI led language translation platform

May 25, 2022
Foreign Investment Facilitation Portal (FIF)

Foreign Investment Facilitation Portal (FIF)

May 25, 2022
World Bank’s World Governance Indicators

World Bank’s World Governance Indicators

May 20, 2022
GatiShakti Sanchar portal

GatiShakti Sanchar portal

May 18, 2022
NITI Aayog’s  National Data & Analytics Platform (NDAP)

NITI Aayog’s National Data & Analytics Platform (NDAP)

May 14, 2022
PM-WANI scheme

PM-WANI scheme

May 12, 2022
PRAAPTI portal

PRAAPTI portal

May 11, 2022
Adivasi Grants Management System (ADIGRAMS)

Adivasi Grants Management System (ADIGRAMS)

May 2, 2022
Prime Minister’s Awards for Excellence in Public Administration

Prime Minister’s Awards for Excellence in Public Administration

April 19, 2022
Please login to join discussion

Our Offline Classroom Student

PRELIMS 2021 POLITY QUESTIONS ANALYSED

https://youtu.be/5q8hBcRGhAs

PRELIMS 2021 HISTORY QUESTIONS ANALYSED

https://youtu.be/v0SIZ7SUybg

CONGRATULATIONS TO 2020 TOPPERS !!!

Rank 25 Vaibhav Rawat 

Rank 218 Kankanala Rahul Reddy
Rank 385 Sagar A Wadi
Rank 504 Malashree MV
Rank 573 Shridevi B V
Rank 707 Mamatha G

COURSES OFFERED

PRELIMS SURESHOTS

May 2022
MTWTFSS
 1
2345678
9101112131415
16171819202122
23242526272829
3031 
« Apr    

Browse by Category

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tags

AIR BBC Business Standard CNN Deccan Herald DownToEarth Down to Earth DTE Economic Times ET GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express India today Indiatoday Kurukshetra LiveMint Mains News News Paper Newspaper PIB PIB & The Hindu pre Prelims PRS India RSTV Science Reporter Survey The Hindu The Hindustan Times The India Express The Indian Express The New Indian Express Times of India TOI TOPPERS UNDP website Wikipedia Yojana
JournalsOfIndia

Our vision is to orient the readers to grasp the facts objectively and analyse critically. In the rush of reaching first to the readers, the websites miss the balanced opinion, which is the need of the hour. We aim to reach the readers with more crispness, preciseness and relevance. We bring the articles in UPSC way for the civil services aspirants and the Wisest Way for general readers.

Categories

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tag

AIR BBC Business Standard CNN Deccan Herald DownToEarth Down to Earth DTE Economic Times ET GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express India today Indiatoday Kurukshetra LiveMint Mains News News Paper Newspaper PIB PIB & The Hindu pre Prelims PRS India RSTV Science Reporter Survey The Hindu The Hindustan Times The India Express The Indian Express The New Indian Express Times of India TOI TOPPERS UNDP website Wikipedia Yojana

Newsletter

The most important UPSC news and events of the day.

Get Journals daily newsletter on your inbox.

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

  • Login
  • Sign Up
  • Home
  • SNIPPETS
  • ARTICLES
  • BROWSE
  • DOWNLOADS
No Result
View All Result

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In