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This article is written by Abhishek Sahu 

Introduction

As technology advances world is becoming smaller. People of different countries, ethnicities, religions, are coming closer and trying to understand each other by defeating their reservations and they try to help one another in whatever way is possible. Among these people, some are who help with money, they donated the money to the NGOs so that they can help the needy people around the world where they can’t reach by themselves.

But sometimes these NGOs are used as a front to carry out illegal activities like money laundering, promoting terrorism, destabilizing the government, disturbing the peace and harmony of the nation, etc.

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Sometimes these NGOs are frauds they take money from the donor in the name of helping the needy people but ended up using that money for their profit. There are some cases where NGOs took heavy donations in the name of aiding the poor and ran away with that donation money.

So, to keep these NGOs in check, and to see nothing illegal happen with the donation money given to the organization, like NGOs, FCRA law is implemented in the country. 

What is FCRA?

FCRA is an Act which allows the government to control the flow of the foreign funds in the country which might come in the form of donations or contribution or some other way.

First enacted in 1976 and then amended in 2010 and introduction of new rules in 2015 and then again amendment in 2017, these developments brought some structural changes in the act.

Like in 2015 MHA introduce 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.

What is Foreign Contribution?

As defined in Section 2(1)(h) of FCRA, 2010, “foreign contribution” means the donation, delivery, or transfer made by any foreign source ─

  • of any article, not being an article given to a person* as a gift for his personal use,

If the market value, in India, of such article, article in India, on the date of such gift is not more than

Such sum as may be specified from time to time by the Central Government by the Rules made by it on this behalf.

Type of FCRA registration

Normal Registration

This type of registration is done for five years and after every five-year organization has to apply for the renewal of the registration. 

Following are the important things to keep in mind while register on FCRA-:

  • The organization must be registered under one of the following acts-
  1. Societies Registration Act, 1860
  2. The Indian Trusts Act, 1882 
  3. Registered as Section 8 Company as per the Companies Act, 2013 or any such Action as may be required.
  • That organization must have made rational contributions by its activities in its chosen field of work.
  • The organization must have spent a minimum of Rs. 10,00,000 in the last 3 years towards achieving its objectives (Excludes administrative expenditure).
  • Must submit the copies of the financial statements of the last 3 years that are duly audited by qualified Chartered Accountants.
  • FCRA rules of 2010 established that every FCRA registration needs to be renewed after every five years. 
  • As per the provisions, the renewal application has to be submitted within six months from the date of expiry of the certificate for registration.
  • Documents needed for the Renewal of Registration are Registration Certificate of the Association, Memorandum of association (a legal document which defines the specific object for which company is formed and its relation with the shareholder), and FCRA Registration Certificate of association issued by MHA.

Prior Permission Registration

This way is best suited to the newly registered organization which requires foreign contributions. But they have to mention the specific amount of contribution specific person or organization from whom they are receiving the contribution and the specific project for which they are getting the contribution. Following are the documents required for the prior permission registration-:

  • The organization must be registered under one of the following acts-
  1. Societies Registration Act, 1860
  2. The Indian Trusts Act, 1882 
  3. Registered as Section 8 Company as per the Companies Act, 2013 or any such Action as may be required.
  • An investor should submit a commitment letter to the Ministry of Home Affairs which mentioned-:
  1. Amount of Contribution given.
  2. Project for which the contribution is given.
  • In case when the Indian recipient organization and foreign donor organization have common members, the following conditions need to be met:
  1. The Chief Functionary of the Indian organization can’t be part of the donor organization.
  2. At least 51% of the members/office-bearers of the governing body of the Indian recipient organization should not be employees/members of the foreign donor organization.
  • Where the foreign donor is an individual:
  1. He cannot be the Chief Functionary of the Indian organization.
  2. At least 51% of office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.

Cancellation of FCRA Registration

There are numerous reasons where an NGO’s foreign funding registration can be cancelled on conditions like –

  • The fund given by the foreign donor is not utilized properly and used for own personal interest.
  • The NGO fails to file annual compliance for three consecutive years.
  • Any member of the organization files a complaint that the NGO is not working properly and if it is proved.

Where to open FCRA Account

Central Government with the FCRA (Amendment), 2020 notified the specific branch in which FCRA accounts can be open. The existing FCRA account holder and the NGOs who have already given the certificate of registration or prior permission by the central government have to open the FCRA account in the specified branch. The complete details of the specified branch i.e., SBI NDMB are as under:

Name of the Branch- State Bank of India, New Delhi Main Branch (NDMB). 

Address of the FCRA Cell at NDMB- FCRA Cell, 1st Floor, 11, Sansad Marg, New Delhi-110001,

Branch Code- 00691 

IFSC Code- SBIN0000691 

SWIFT CODE- SBININBB104 

e-Mail ID- [email protected] 

Telephone No.- 011-23374392, 23374390, 23374143, 23374213

Procedure to open FCRA Account

  • The applicant shall collect the Account Opening Form (AOF) physically from the nearest SBI branch or the SBI branch of his choice or download the same from the website of SBI.
  • Submit the duly filled-up form along with mandatory KYC documents, for scrutiny/verification. Mandatory documents should include KYCs of signatories and KYCs of Controlling Person / Beneficial Owner.
  • And forward the same form through mail as well as sending a hard copy of AOF for the opening of the “FCRA Account” at NDMB. 
  • The applicant shall receive an acknowledgement in this regard from the AOF accepting Branch. 
  • The AOF accepting branch of SBI would scrutinize AOF and KYC documents and email the verified documents to SBI, NDMB within 3 working days from the date of receipt of completed documents.
  • SBI, NDMB shall confirm to the applicant through an email regarding the receipt of AOF and other documents within 1 working day of its receipt. 
  • The NDMB will intimate to the applicant entity the details of the “FCRA Account” so opened within 3 working days from the date of receipt of duly verified scanned copies of a complete set of AOF and KYC documents from the e-mail ID of the receiving branch. 
  • The intimation will be sent by registered email ID as well as through SMS. 
  • Applicant can maintain their existing FCRA Accounts for Keeping or Utilization purposes.

Procedure after the opening of the FCRA account if the applicant already had prior permission or registration certificate from central government-:

  • The NDMB will allow receipt of foreign contribution only in the “FCRA Account” opened in NDMB after confirming that the MHA has already granted a certificate or prior permission under section 12 of FCRA, 2010. 
  • The foreign inward remittance received should invariably contain the following details: 
  1. “FCRA Account” Number of the Beneficiary in the NDMB of SBI 
  2. SWIFT Code of NDMB (SBININBB104) 
  3. Name of the Beneficiary 
  4. Name of the Donor/ Remitter 
  5. Account number of the Donor/Remitter 
  6. Donor/Remitter’s Address 
  7. Donor/Remitter’s Country of Residence
  • In case of the fresh applicant, the NDMB shall open the “FCRA Account” and then wait for MHA’s decision on the application of the applicant for grant of prior permission or registration certificate. 
  • As soon as the MHA approval for such registration or prior permission is conveyed to NDMB through an e-mail, NDMB shall allow inflow of foreign contribution into the relevant account from that date.
  • SBI, NDMB shall intimate the customers, through an e-mail and SMS regarding receipt of foreign contribution. 
  • The customers will be required to submit an undertaking detailing the purpose of the receipt of funds as per FEMA declaration and RBI guidelines to the SBI Branch, where it had initially submitted the AOF. 
  • The Branch shall then forward duly scrutinized copies to New Delhi Main Branch on the designated email id ([email protected]). 
  • Standard Forex conversion rate as permitted under the FEMA guidelines and RBI instructions to be applied on the inflow of foreign currency. It shall be duly intimated to the account holder through an email. 
  • The “FCRA Account” holder shall have complete freedom to transfer the foreign contribution (FC) received in “FCRA Account” opened in NDMB to another “FCRA Account”, if any, of his choice opened in any branch of any Scheduled Commercial Bank as per its convenience for keeping or utilization. It may also avail Internet Banking facility (with full transaction rights) with the NDMB. 
  • NDMB will not levy any charges/fees etc on any transfer of foreign contribution from the “FCRA Account” to “another FCRA Account” if any, and to Utilization Account, if any, of the entity. For each such transfer, the “FCRA Account” holder to be informed through an e-mail as well as SMS immediately.

Grievance Redressal Mechanism

If the “FCRA Account” holder raises any grievance while the opening of “FCRA Account” or while operating it, the following redressal mechanism shall be available:

  • The “FCRA Account” holder or the applicant entity may send an e-mail to [email protected]. The NDMB shall create an “FCRA Cell” to handle all such e-mails.
  • The applicant person/entity or the “FCRA Account” holder may also register their complaints/grievances/suggestions on 011-23374392, 23374143, 23374213.

List of agencies approved by FCRA

Sixteen banks are approved by the FCRA to open the FCRA account. A list of these banks can be found by clicking the link below-: https://fcraonline.nic.in/fc_bank_list.aspx

Many international organizations are exempted by the FCRA from the list of “French Source” under section 2(1)(j)(ii) of the Foreign Contribution (Regulation) Act, 2010. A list of these agencies can be found by clicking the link below-: https://fcraonline.nic.in/home/PDF_Doc/FCRA-exemptedAgenciesUN.pdf

Conclusion

Almost fifty thousand registered organizations under FCRA are currently working in India but many unregistered organizations are working illegally to keep them in check FCRA was implemented. 

No doubt many of these NGOs are doing good work with the foreign donation they are receiving but some of them are using it for their benefits or to run their agenda. Many political parties also use these NGOs as a front to gain foreign investment.

There are many pros and cons of this law like every other law. Many times, some organizations face unnecessary difficulties like delays in the opening of accounts or some documents, which are frustrating. Recently Delhi High Court directed the SBI to open the FCRA account within ten days upon receiving approval from the Central government.

Surely FCRA needs changes there is room for a lot of improvement which will come with time. Till then we have to wait and deal with the current laws because it is important for our national security.

Reference

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