FCRA Full Form (Foreign Contribution Regulation Act)

The Foreign Contribution Regulation Act (FCRA) is a legal framework that regulates the acceptance and utilization of foreign contributions and foreign hospitality by individuals, organizations, and associations in India. The act aims to ensure that such contributions do not affect national interest and are not used for activities that threaten the sovereignty and integrity of the country. In this article, we will delve deeper into the FCRA full form, its provisions, and how it impacts the entities covered under it.

The Foreign Contribution Regulation Act (FCRA) was enacted by the Indian Parliament in 1976, with the primary objective of regulating the acceptance and utilization of foreign contributions by individuals and organizations in India.

The act applies to all associations and individuals who seek to receive or utilize foreign contributions in India.

History of FCRA

The FCRA was first enacted in 1976 to regulate the inflow of foreign funds and to ensure that such contributions are used for the welfare of society and not for activities that are detrimental to the country’s interests.

The act was amended several times to expand its scope and to make it more stringent, particularly after instances of misuse of foreign funds were reported.

Applicability of FCRA

The FCRA applies to individuals, associations, and organizations, including non-governmental organizations (NGOs), which seek to accept or utilize foreign contributions. The act also applies to foreign companies registered in India and to Indian companies with more than 50% foreign shareholding.

However, contributions made by foreign governments and international organizations such as the United Nations are exempted from the FCRA’s purview.

Provisions of FCRA

The FCRA lays down provisions for the acceptance and utilization of foreign contributions. It requires entities covered under the act to obtain prior permission from the government to accept foreign contributions.

The act also mandates that foreign contributions can only be used for specific purposes as prescribed by the government.

FCRA Registration

Entities covered under the FCRA must obtain prior registration from the government to receive foreign contributions. The registration is valid for five years and must be renewed before the expiry of its validity.

Renewal of FCRA Registration

Entities must apply for the renewal of their FCRA registration six months before the expiry of its validity.

The renewal is subject to compliance with the provisions of the act, including timely submission of annual returns and utilization of foreign contributions for the purposes specified.

Cancellation of FCRA Registration

The government can cancel the FCRA registration of entities that violate the provisions of the act or use foreign contributions for purposes other than those specified.

Such entities are also barred from applying for registration or seeking prior permission for a period of three years.

Utilization of Foreign Contributions

The FCRA mandates that foreign contributions can only be used for specific purposes as prescribed by the government.

The act requires entities to maintain a separate bank account for foreign contributions and to use such funds only for the purposes specified.

The act also prohibits the utilization of foreign contributions for political purposes or for activities that threaten national security.

Reporting and Record Keeping

Entities covered under the FCRA are required to maintain records and accounts of all foreign contributions received and utilized.

They must submit an annual return to the government, which includes details of the foreign contributions received and utilized during the year.

Offenses and Penalties under FCRA

The FCRA lays down strict penalties for non-compliance with its provisions. Entities that violate the act can face penalties ranging from fines to imprisonment. The act also empowers the government to freeze the bank accounts of entities that violate its provisions.

Recent Developments

The FCRA has undergone several amendments in recent years to make it more stringent and to regulate the flow of foreign funds into the country.

In 2020, the Indian government amended the FCRA to restrict the use of foreign funds for administrative expenses and to mandate that all entities covered under the act open an FCRA account with the State Bank of India.

Impact of FCRA on NGOs

The FCRA has had a significant impact on the functioning of NGOs in India. The act has made it more challenging for NGOs to accept foreign contributions and has increased their compliance burden.

The act has also led to several controversies, with some NGOs alleging that the act is being misused to target organizations critical of the government.

FCRA Controversies

The FCRA has been a subject of several controversies, with some organizations alleging that the act is being misused to target NGOs critical of the government. In 2015, the Indian government cancelled the FCRA registration of several NGOs, including Greenpeace India and Ford Foundation, citing violations of the act.

The move was widely criticized by civil society groups, who alleged that it was an attempt to stifle dissent and silence critical voices.

Conclusion

The Foreign Contribution Regulation Act is an essential legal framework that regulates the acceptance and utilization of foreign contributions in India.

The act aims to ensure that such contributions do not threaten national interests and are used for the welfare of society. The act has had a significant impact on NGOs in India and has led to several controversies.

However, the act remains a critical tool in regulating the flow of foreign funds into the country and protecting national interests.

FAQs

What is FCRA?

FCRA stands for the Foreign Contribution Regulation Act. It is a legal framework that regulates the acceptance and utilization of foreign contributions in India.

Who does FCRA apply to?

FCRA applies to individuals, associations, and organizations, including NGOs, which seek to accept or utilize foreign contributions.

What are the penalties for violating FCRA?

Entities that violate FCRA can face penalties ranging from fines to imprisonment. The government can also freeze the bank accounts of entities that violate the act.

What are the recent developments in FCRA?

In 2020, the Indian government amended the FCRA to restrict the use of foreign funds for administrative expenses and to mandate that all entities covered under the act open an FCRA account with the State Bank of India.

What is the impact of FCRA on NGOs?

The FCRA has made it more challenging for NGOs to accept foreign contributions and has increased their compliance burden. The act has also led to several controversies, with some NGOs alleging that it is being misused to target organizations critical of the government.

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