Foreign Contribution (Regulation) Act 2010 and Amendment Act 2020 of FCRA

CRA 2010 is an Act to consolidate the law to regulate the acceptance and utilisation of foreign contributions or foreign hospitality by certain individuals or associations or companies and prohibit acceptance and utilisation of foreign contributions or foreign hospitality for any activities determinantal to the national interest and matters connected therewith or incidental thereto.

This act extends to the whole of India and it shall apply to (a) Citizens of India outside India and (b) associate branches or subsidiaries outside India, of companies or bodies, corporations registered or incorporated in India.

The Foreign Contribution (Regulation) Amendment Bill, 2020 was introduced in Lok Sabha on September 20, 2020.  The Bill amends the Foreign Contribution (Regulation) Act, of 2010.  The Act regulates the acceptance and utilisation of foreign contributions 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. The amended Act is posted in the BLOCK letter

Section 3:   Prohibition to accept foreign contributions.

In section 3 of the Foreign Contribution (Regulation) Act, 2010 (hereinafter referred to as the principal Act), in sub-section (1),—

(i) for clause (c), [1[(c) public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;]

1) No foreign contribution shall be accepted by any–

(a) candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;

1[(c) public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;]

(d) member of any Legislature;

(e) political party or office-bearer thereof;

(f) organisation of a political nature as may be specified under sub-section (1) of section 5 by the Central Government;

(g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode or any other electronic form as defined in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) or any other mode of mass communication;

(h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in clause (g).

2[Explanation. 1–For the purpose of clause (c), public servant means a public servant as defined in section 21 of the Indian Penal Code (45 of 1860).

Explanation 2.–In clause (c) and section 6, the expression “corporation” means a corporation owned or controlled by the Government and includes a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013).]

(2) (a) No person, resident in India, and no citizen of India resident outside India, shall accept any foreign contribution, or acquire or agree to acquire any currency from a foreign source, on behalf of any political party, or any person referred to in sub-section (1), or both.

(b) No person, resident in India, shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source to any person if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to any political party or any person referred to in sub-section (1), or both.

(c) No citizen of India resident outside India shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source, to–

(i) any political party or any person referred to in subsection (1), or both; or

(ii) any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a political party or any person referred to in subsection (1), or both.

(3) No person receiving any currency, whether Indian or foreign, from a foreign source on behalf of any person or class of persons, referred to in section 9, shall deliver such currency–

(a) to any person other than the person for which it was received, or

(b) to any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a person other than the person for which such currency was received.

 The following clause is substituted in amendment Act 2020, namely:—

‘Explanation 1.—For the purpose of clause (c), “public servant” means a public servant as defined in section 21 of the Indian Penal Code.

Explanation 2.—In clause (c) and section 6, the expression “corporation” means a corporation owned or controlled by the Government and includes a Government company as defined in clause (45) of section 2 of the Companies Government company as defined in clause (45) of section 2 of the Companies Act, 2013.’.

Section 4:   Persons to whom section 3 shall not apply.

Nothing contained in section 3 shall apply to the acceptance, by any person specified in that section, of any foreign contribution where such contribution is accepted by him, subject to the provisions of section 10,—

(a) by way of salary, wages, or other remuneration due to him or to any group of persons working under him, from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source; or

(b) by way of payment, in the course of international trade or commerce, or the ordinary course of business transacted by him outside India; or

(c) as an agent of a foreign source in relation to any transaction made by such foreign source with the Central Government or State Government; or

(d) by way of a gift or presentation made to him as a member of any Indian delegation, provided that such gift or present was accepted in accordance with the rules made by the Central Government with regard to the acceptance or retention of such gift or presentation; or

(e) from his relative; or

(f) by way of remittance received, in the ordinary course of business through any official channel, post office, or any authorised person in foreign exchange under the Foreign Exchange Management Act, 1999 (42 of 1999); or

(g) by way of any scholarship, stipend, or any payment of like nature:

Provided that in case any foreign contribution is received by any person specified under section 3, for any of the purposes other than those specified under this section, such contribution shall be deemed to have been accepted in contravention of the provisions of section 3.

Section 6:   Restriction on acceptance of foreign hospitality.

No member of a Legislature or office-bearer of a political party or Judge or Government servant or employee of any corporation or any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government, any foreign hospitality:

Provided that it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness contracted during a visit outside India, but, where such foreign hospitality has been received, the person receiving such hospitality shall give, within one month from the date of receipt of such hospitality an intimation to the Central Government as to the receipt of such hospitality, and the source from which, and how, such hospitality was received by him.

1[7. Prohibition to transfer foreign contribution to other person.–No person who–

(a) is registered and granted a certificate or has obtained prior permission under this Act; and

(b) receives any foreign contribution, shall transfer such foreign contribution to any other person.]

For section 7 of the principal Act, the following section is substituted in amendment Act 202, namely:—

“7. No person who—

(a) is registered and granted a certificate or has obtained prior permission

 under this Act; and

 (b) receives any foreign contribution,

shall transfer such foreign contribution to any other person.”.

Section 8.   Restriction to utilise foreign contributions for administrative purposes.

(1) Every person, who is registered and granted a certificate or given prior permission under this Act and receives any foreign contribution,–

(a) shall utilise such contribution for the purposes for which the contribution has been received:

Provided that any foreign contribution or any income arising out of it shall not be used for speculative business:

Provided further that the Central Government shall, by rules, specify the activities or business which shall be construed as speculative business for the purpose of this section;

(b) shall not defray as far as possible such sum, not exceeding 1[twenty per cent.] of such contribution, received in a financial year, to meet administrative expenses:

Provided that administrative expenses exceeding 1[twenty per cent.] of such contribution may be defrayed with prior approval of the Central Government.

(2) The Central Government may prescribe the elements which shall be included in the administrative expenses and the manner in which the administrative expenses referred to in sub-section (1) shall be calculated. 2. Subs. by s. 4, ibid., for “fifty per cent.” (w.e.f. 29-9-2020).

In section 8 of the principal Act, in sub-section (1), for the words “fifty per cent.”, at both the places where they occur, the words “twenty per cent.” shall be substituted.

Section 9:   Power of Central Government to prohibit receipt of foreign contribution, etc., in certain cases.

Section 10:   Power to prohibit payment of currency received in contravention of the Act.

Section 11:   Registration of certain persons with Central Government.

• Save as otherwise provided in this Act, no person having a definite cultural, economic, educational, religious or social programme shall accept foreign contribution unless such person obtains a certificate of registration from the Central Government:

In section 11 of the principal Act, in sub-section (2), in the proviso, for the words,

brackets and figures “Provided that if the person referred to in sub-sections (1) and (2) has been found guilty”, the following shall be substituted in amended Act 202, namely:—

“Provided that the Central Government, on the basis of any information or report, and after holding a summary inquiry, has reason to believe that a person who has been granted prior permission has contravened any of the provisions of this Act, it may, pending any further inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution which has not been received or, as the case may be, any additional foreign contribution, without prior approval of the Central Government:

Provided further that if the person referred to in subsection (1) or this sub-section has been found guilty”.

The following line shall be inserted, namely:—

‘(1A) Every person who makes an application under sub-section (1) shall be

 required to open ‘‘FCRA Account’’ in the manner specified in section 17 and mention details of such account in his application.’

Section 12:   Grant of certificate of registration.

(1) An application by a person referred to in section 11 for the grant of a certificate or giving prior permission, shall be made to the Central Government in such form and manner and along with such fee, as may be prescribed.

2[(1A) Every person who makes an application under sub-section (1) shall be required to open an “FCRA Account” in the manner specified in section 17 and mention details of such account in his application.]

(2) On receipt of an application under sub-section (1), the Central Government shall, by order, if the application is not in the prescribed form or does not contain any of the particulars specified in that form, reject the application.

(3) If on receipt of an application for grant of certificate or giving prior permission and after making such inquiry as the Central Government deems fit, it is of the opinion that the conditions specified in sub-section (4) are satisfied, it may, ordinarily within ninety days from the date of receipt of application under sub-section (1), register such person and grant him a certificate or give him prior permission, as the case may be, subject to such terms and conditions as may be prescribed:

Provided that in case the Central Government does not grant, within the said period of ninety days, a certificate or give prior permission, it shall communicate the reasons therefor to the applicant:

Provided, that a person shall not be eligible for grant of certificate or giving prior permission if his certificate has been suspended and such suspension of certificate continues on the date of making application.

(4) The following shall be the conditions for the purposes of subsection (3), namely:

(a) the person making an application for registration or grant of prior permission under sub-section (1),

(i) is not fictitious or benami;

(ii) has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;

(iii) has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;

(iv) has not been found guilty of diversion or mis-utilization of its funds;

(v) is not engaged or likely to engage in the propagation of sedition or advocate violent methods to achieve its ends;

(vi) is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;

(vii) has not contravened any of the provisions of this Act;

(viii) has not been prohibited from accepting foreign contributions

(b) the person making an application for registration under sub-section (1) has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised;

(c) the person making an application for giving prior permission under sub-section (1) has prepared a reasonable project for the benefit of the society for which the foreign contribution is proposed to be utilised;

(d) in case the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence pending against him;

(e) in case the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him;

(f) the acceptance of foreign contribution by the person referred to in subsection (1) is not likely to affect prejudicially

(i) the sovereignty and integrity of India; or

(ii) the security, strategic, scientific, or economic interest of the State; or

(iii) the public interest; or

(iv) freedom or fairness of election to any Legislature; or

(v) friendly relation with any foreign State; or

(vi) harmony between religious, racial, social, linguistic, regional groups, castes or communities;

(g) the acceptance of foreign contribution referred to in subsection (1),–

(i) shall not lead to incitement of an offence;

(ii) shall not endanger the life or physical safety of any person.

(5) Where the Central Government refuses the grant of certificate or does not give prior permission, it shall record in its order the reasons therefor and furnish a copy thereof to the applicant:

Provided that the Central Government may not communicate the reasons for refusal to grant of certificate or for not giving prior permission to the applicant under this section in cases where there is no obligation to give any information or documents or records or papers under the Right to Information Act, 2005 (22 of 2005).

(6) The certificate granted under sub-section (3) shall be valid for a period of five years and the prior permission shall be valid for the specific purpose or specific amount of foreign contribution proposed to be received, as the case may be.

1. Ins. by s. 6, ibid. (w.e.f. 29-9-2020).

After section 12 of the principal Act, the following section is inserted, namely:—

Section 12A:   Power of Central Government to require Aadhaar number, etc., as an identification document.

“12A. Notwithstanding anything contained in this Act, the Central Government may require that any person who seeks prior permission or prior approval under section 11 or makes an application for grant of certificate under section 12, or, as the case may be, for renewal of certificate under section 16, shall provide as an identification document, the Aadhaar number of all its office bearers or Directors or other key functionaries, by whatever name called, issued under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits, and Services) Act, 2016, or a copy of the Passport or Overseas Citizen of India Card,  in case of a foreigner.

Section 13: Suspension of Certificate:

(1) Where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of the question of canceling the certificate on any of the grounds mentioned in sub-section (1) of section 14, it is necessary so to do, it may, by order in writing, suspend the certificate ¹[for a period of one hundred and eighty days, or such further period, not exceeding one hundred and eighty days, as may be specified] in the order.

(2) Every person whose certificate has been suspended shall–

(a) not receive any foreign contribution during the period of suspension of certificate:

Provided that the Central Government, on an application made by such person, if it considers appropriate, allow receipt of any foreign contribution by such person on such terms and conditions as it may specify;

(b) utilise, in the prescribed manner, the foreign contribution in his custody with the prior approval of the Central Government.

In section 13 of the principal Act, in sub-section (1), for the words “for such period not exceeding one hundred and eighty days as may be specified”, the words “for a period of one hundred and eighty days, or such further period, not exceeding one hundred and eighty days, as may be specified” shall be substituted.

Section 14: Cancelation of certificate:

(1) The Central Government may if it is satisfied after making such inquiry as it may deem fit, by an order, cancel the certificate if

(a) the holder of the certificate has made a statement in, or in relation to, the application for the grant of registration or renewal thereof, which is incorrect or false; or

(b) the holder of the certificate has violated any of the terms and conditions of the certificate or renewal thereof; or

(c) in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate; or

(d) the holder of the certificate has violated any of the provisions of this Act or rules or order made thereunder; or

(e) if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive years or has become defunct.

(2) No order of cancellation of a certificate under this section shall be made unless the person concerned has been given a reasonable opportunity to be heard.

(3) Any person whose certificate has been canceled under this section shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate.

After section 14 of the principal Act, the following section is inserted, namely:—

“14A. on a request being made on this behalf, the Central Government may permit any person to surrender the certificate granted under this Act, if, after making such inquiry as it deems fit, it is satisfied that such person has not contravened any of the provisions of this Act, and the management of foreign contribution and asset, if any, created out of such contribution has been vested in the authority as provided in subsection (1) of section 15.”.

Section 15: Management of foreign contribution of the person whose certificate has been canceled or surrendered.

 (1) The foreign contribution and assets created out of the foreign contribution in the custody of every person whose certificate has been canceled under section 14 ¹[or surrendered under section 14A] shall vest in such authority as may be prescribed.

---

(2) The authority referred to in subsection (1) may, if it considers necessary and in the public interest, manage the activities of the person referred to in that sub-section for such period and in such manner, as the Central Government may direct and such authority may utilise the foreign contribution or dispose of the assets created out of it in case adequate funds are not available for running such activity.

---

In section 15 of the Principal Act, —

(i) In the marginal heading, after the word “canceled“, the words “or surrendered” are inserted in the amended Act 2020;

 (ii) in sub-section (1), after the word and figures “section 14”, the words, figures, and letter “or surrendered under section 14A” is inserted.

Section 16: Renewal of certificate

(1) Every person who has been granted a certificate under section 12 shall have such certificate renewed within six months before the expiry of the period of the certificate.

¹[Provided that the Central Government may, before renewing the certificate, make such inquiry, as it deems fit, to satisfy itself that such person has fulfilled all conditions specified in sub-section (4) of section 12.]

(2) The application for renewal of the certificate shall be made to the Central Government in such form and manner and accompanied by such fee as may be prescribed.

(3) The Central Government shall renew the certificate, ordinarily within ninety days from the date of receipt of application for renewal of certificate subject to such terms and conditions as it may deem fit and grant a certificate of renewal for a period of five years:

Provided that in case the Central Government does not renew the certificate within the said period of ninety days, it shall communicate the reasons therefor to the applicant:

Provided, that the Central Government may refuse to renew the certificate in case where a person has violated any of the provisions of this Act or rules made thereunder.

In section 16 of the principal Act, in sub-section (1), the following proviso is inserted in Amendment Act 2020 inserted, namely:—

“Provided that the Central Government may, before renewing the certificate,

make such inquiry, as it deems fit, to satisfy itself that such person has fulfilled all conditions specified in sub-section (4) of section 12.”.

For section 17 of the principal Act, the following section is substituted in the amendment act, namely:-

’17. (1) every person who has been granted a certificate or prior permission under

 section 12 shall receive foreign contribution only in an account designated as an “FCRA Account” by the bank, which shall be opened by him for remittances of foreign contribution in such branch of the State Bank of India at New Delhi, as the Central Government may, by notification, specify in this behalf:

Provided that such person may also open another ‘‘FCRA Account’’ in any of

 the scheduled bank of his choice to keep or utilise the foreign contribution which has been received from his ‘‘FCRA Account’’ in the specified  branch of State Bank of India at New Delhi:

Provided further that such person may also open one or more accounts in one or

more scheduled banks of his choice to which he may transfer for utilising any foreign contribution received by him in his ‘‘FCRA Account’’ in the specified branch of the State Bank of India at New Delhi or kept by him in another ‘‘FCRA Account’’ in a scheduled bank of his choice:

Provided, that no funds other than foreign contributions shall be received or deposited in any such account.

(2) The specified branch of the State Bank of India in New Delhi or the branch of

 the scheduled bank where the person referred to in subsection (1) has opened his foreign contribution account or the authorised person in foreign exchange, shall report to such authority as may be specified,—

(a) the prescribed amount of foreign remittance;

(b) the source and manner in which the foreign remittance was received; and

 (c) other particulars, in such form and manner as may be prescribed.’.

Related Post: