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Parliament has passed Foreign Contribution (Regulation) Amendment Bill 2020 in the recently concluded Monsoon Session. The Act regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.

Highlights of the bill:

  • Prohibition to accept foreign contribution:
    • Under the Act, certain persons are prohibited to accept any foreign contribution. These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
    • The Bill adds public servants (as defined under the Indian Penal Code) to this list. 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.
  • Transfer of foreign contribution:
    • Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution).
    • The Bill amends this to prohibit the transfer of foreign contribution to any other person. The term ‘person’ under the Act includes an individual, an association, or a registered company.
  • Aadhaar for registration: 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.
  • FCRA account:
    • Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them. However, they may open more accounts in other banks for utilisation of the contribution.
    • The Bill amends this to state that foreign contribution must be received only in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government.
  • Restriction in utilisation of foreign 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 unutilised or unreceived foreign contribution may be utilised or received, only with the prior approval of the central government.
  • Renewal of license: Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration.
  • Reduction in use of foreign contribution for administrative purposes:
    • Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses. The Bill reduces this limit to 20%.
  • Surrender of certificate: The Bill adds a provision allowing the central government to permit a person to surrender their registration certificate.
  • Suspension of registration: 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.

Need of the amendments:

  • It is important to make NGO’s accountable and responsible for their acts.
  • End use of money is important.
  • The objective is primarily to regulate the acceptance and utilization of foreign contribution or foreign hospitality by specified persons and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activity detrimental to national interest.
  • The intent of the Act is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.
  • The need to strengthen the Act has arisen due to several organisations “misutilising or misappropriating” the funds leading to the government cancelling 20,664 such registrations in the past few years.
  • The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act.
  • Criminal investigations also had to be initiated against dozens of such non-governmental organisations which indulged in outright misappropriation or mis-utilisation of foreign contribution.


  • The Bill will enhance government power and restrict foreign-funded civil society work in India.
  • It can be used as a means to “target those who speak against the government”.
  • It will curtail the ease of doing business for civil society organisations.
  • To allow for the central government to hold a summary inquiry to direct bodies with FCRA approval to “not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution”.
  • To limit the use of foreign funds for administrative purposes. This would impact research and advocacy organisations which use the funding to meet their administrative costs.


               NGOs play an important role in the upliftment of the weaker sections of the society and their overall development. This is especially true in the case of India, where a vast majority of its population continues to remain under the poverty line and have little or no access to even basic facilities provided by the government. A regulatory mechanism to keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour. Citizens today are keen to play an active role in processes that shape their lives and it is important that their participation in democracy go beyond the ritual of voting and should include promotion of social justice, gender equity, inclusion etc.