For registration call @ 9958826967

Foreign Contribution (Regulation) Amendment Bill, 2020 (24 September 2020)

Foreign Contribution (Regulation) Amendment Bill, 2020 (24 September 2020)

Why in News:

Parliament has passed Foreign Contribution (Regulation) Amendment Bill 2020 in the recently concluded Monsoon Session.


The Rajya Sabha passed the Foreign Contribution (Regulation) Amendment Bill, 2020 by a voice vote following discussions on Wednesday. The bill was moved for passing by Minister of State (MoS), Home Affairs, Nityanand Rai in the house. The bill was passed by the Lok Sabha on Monday and will now be sent to President Ram Nath Kovind for his assent.


Foreign contribution is the donation or transfer of any currency, security or article by a foreign source.

The bill amends the Foreign Contribution (Regulation) Act, 2010 which regulates the acceptance and utilization of foreign contribution by individuals, associations, and companies.

The bill adds that the public servants will be prohibited to accept any foreign contribution.

Summary of the Debate

Major highlights of the Bill:

  • Aadhaar for registration: The functionaries of organization which are registered under the FCRA law, they should be required to provide identification in the form of Aadhar number.
  • FCRA account: All foreign contribution has to be accepted in a specified bank account of the SBI (State Bank of India) in New Delhi.
  • Prohibition: It is bringing public servants within the ambit of FCRA. It seeks to prohibit ‘public servants’ from receiving any foreign funding.
  • Reduction in administrative purposes: The administrative expanses cannot be more than 20 percent of annual funds (earlier 50 percent).
  • Transfer of foreign contribution: Earlier, under the 1976 law, an entity which was allowed to receive foreign contribution after it fulfilled all the criteria, it could give some part of that contribution to another organizations which was also registered under the FCRA law. But the current amendment seeks to prohibit any transfer of foreign contribution to any association/person.
  • Renewal of license: Every person who has been given a certificate of registration must renew the certificate within six months of expiration.
  • Surrender of certificate: The Bill adds a provision allowing the central government to permit a person to surrender their registration certificate.

Reasons of these amendments:

  • There are several NGOs who have been accused of diverting funds, misusing funds and some of the key functionaries trying to take away the funds.
  • There were some politicians and bureaucrats who had several NGOs.
  • Certain foreign contributions are used to peddle a particular narrative which could be challenging to the security and integrity of the nation.
  • Certain organizations are there like the ‘Citizen of Justice’ or the ‘Jan Sangharsh Samiti’ and there are several others who have been found collecting money and taking away for personal use.
  • There are lots of Institution on the Indo-Bangladesh and the Indo-Nepal border, on the both sides especially on the Indian side within the 5 kms of border, so many of these religious institutions and groups have come up and they are perpetuating certain agenda, propagated from across the border.
  • There have been some organizations who have been using the foreign funds for religious conversion.

Criticisms against the Bill:

  • It can be used to target the organizations and NGOs who speak against the government.
  • It will curtail the ease of doing business for civil society organizations.
  • Many Dalit, Adivasi, women workers who workingwith several NGOs may lose their jobs.
  • The Bill will enhance government power and restrict foreign-funded civil society work in India.
  • Work of NGOs working in remote areas will suffer.

Statement of objects and reasons pointed out for the bill are:

  • There are statutory compliances that have to be met under the law. Some of these statutory compliances are filing of annual returns, maintaining of accounts, submission of returns to the government.
  • Many of these statutory compliances were not met because of which cancellation haveto take place.
  • When the registration was cancelled, it also led to certain investigation that have to be initiated against certain organizations.
  • Whether the contribution which was received were being appropriately utilized for the purpose for which it was received and the limit to ensure that was earlier 50 percent when it came to administrative expenses and that is why limit has been brought down to 20 percent.

Many of the non-profitable Civil Society Organizations do not comply for the several reasons:

  • Compliance cost is higher
  • Many a time the funds may not have been utilized for the purpose it has been designated.
  • Many a time the administrative cost are much more than the actual funds that is required to run a program for the intended beneficiaries.

Way Forward:

  • There are lots of accumulation of money by these NGOs and sometimes it is used for creation of assets and accumulation of profits. So, capital formation should not be happened in NPOs sector.
  • Single bank thing is the biggest check on the Civil Society.
  • The administrative cost and travel cost by the NGOs should be controlled because there have been instances that when an initiative was taken in Naxal affected area, chartered planes were used to carry the volunteers from Delhi and other places to participate in protest against the government of India.

Important points made by the Guests

R.V.S. Mani, Former Under Secretary, Ministry of Home Affairs 

  • There were NGOs which was registered under Society Registration Act, but now many of them are coming out as section 25 company also.
  • According to the MHA dashboard, in 2017-18, more than Rs 18,000 crores of foreign funds were received in that year, out of which 12,000 crores were received by Christian organizations, around 5500 crores were received by Islamic organizations and around 500 crores were received by organizations which were filing vexatious litigation, PILs against all development policy and that was the reason for cancellation.
  • Repeatedly, they were challenging the integrity of India, they were threat to the national security and all, both in terms of vexatious litigations as well as in terms of giving a communal colour.
  • Restriction on administrative expenses is also very vital because many people the foot soldiers who carry out these types of narrative or listed as worker of particular organization, they were perpetuating a hidden agenda of somebody else from the outside of the country.
  • There are many public servants who also run other type of NGOs like working on children nutrition, what are they propagating, already there are lots of disengagement, conduct rule do provide for that but still outside the boundary of conduct rule if they are able to setup an NGO and do activities which are against the rule.

Chakshu Roy, Head of Outreach, PRS Legislative Research 

  • The bill is making changes to a law that was made in the 1970s which is called as Foreign Contribution Regulation Act (FCRA). The original law was putting limitations on certain types of individuals and entities who could accept foreign contribution, for example’ when the law was originally made people who were contesting election could not accept foreign contribution for the election expenses, it also included members of legislature, newspaper editors, owners of newspaper, leaders of political parties, etc. 
  • Then there was a big amendment to the law which took place in 2006 that added a couple of things and one of those things was that under the 1976 law who accept foreign donation or foreign contribution he/she has to register under the law and the 2006 amendment said that the registration will have to be renewed in every 6 months. It also added a few more categories of people who were prohibited from receiving foreign hospitality.
  • In the context of public servants, now the government in the legitimate course of its businesses also establishes trusts and societies where a senior public official in his official capacity might be represented as a member of the society or a member of the trust.
  • So, that is also the reason is to ensure that compliances are fully met for that the definition of the public servant has been included. Public servants are defined under the Indian Penal Code, so basically anybody who received government remuneration.

K.A. Badrinath, Senior Journalist

  • There are about 49,840 NGOs in the country which can accept foreign contribution. Till now, in the last decade or so, 20,664 NGOs FCRA clearance has been cancelled.
  • In September, 6 organizations whose foreign contribution registration have been cancelled. So, some amount of tightening of the norms seems to have been done and the objectives of these norms will be to bring about more transparency into the working of NGOs to make the people who are running these NGOs more responsible and accountable.
  • NGOs are saying that these norms are very harsh and unacceptable under these conditions.
  • Public Health Foundation of India was allotted foreign currency contribution and recently it was barred and the reason given by the Home Ministry is that it was trying to lobbying for the tobacco lobby to manipulate the environment related restrictions.


Upload File