Centre Introduces Foreign Contribution (Regulation) Amendment Bill, Makes Aadhaar Mandatory

The government on Sunday, September 20 proposed amendments to the Foreign Contribution Regulation Act that make Aadhaar mandatory for all office bearers of non-governmental organisations that receive foreign contributions.

The strict amendments also seek to restrict public servants from seeking foreign funding. As per the amendments, any person who seeks registration under the FCRA, or wants to renew their FCRA licence, would first have to provide the Aadhaar numbers of all office bearers and functionaries.

The Foreign Contribution Regulation (Amendment) Bill 2020 was introduced in the Lok Sabha on September 20.

The bill seeks to enable the government to permit an NGO or association to surrender its FCRA certificate. Besides this, it also seeks to reduce administrative expenses through foreign funds by an organisation to 20% from the current 50%.

Under the proposed law, NGOs can get foreign funds only in designated FCRA accounts in a State Bank of India branch in New Delhi. However, they may open one or more utilisation accounts in any banks of their choice. The bank's branch would then send a report to the home ministry with details including the amount of foreign remittance, the sources and how it was received.

The bill also seeks to include "public servant" in the ambit of entities that are banned from receiving foreign funds. At present, the restrictions under the Act apply to legislators, election candidates, print and broadcast media, judges, government servants or employees of any corporation or any other body controlled by the centre.

The centre claims that there is a need to strengthen the Act as several organisations' "outright misappropriation or mis-utilisation" of the funds. "This has led to a situation where the central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-governmental organisations, during the period between 2011 and 2019."

"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," the Bill states.

"Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts," it added. The government has also initiated criminal proceedings against "dozens of such non-governmental organisations which indulged in outright misappropriation or mis-utilisation of foreign contribution".

"The amendment was needed to enhance transparency and accountability in the receipt and facilitating genuine non-governmental organisations or associations that are working for the welfare of the society," the centre said.

Till now, the government could only take action after the person or association was "found guilty" of violation of the Act. However, the Centre now seeks to give itself considerable powers by amending Section 11 of the Act that allows to stop organisations from using funds it has received, but not utilised.

The proposed amendments have received massive backlash by civil society organisations, who referred to the Bill as "an attempt to stifle the nonprofit sector."

Amitabh Behar, the chief executive officer of Oxfam India called it a devastating blow. "Red carpet welcome for foreign investments for businesses but stifling and squeezing the nonprofit sector by creating new hurdles for foreign aid which could help lift people out of poverty, ill health and illiteracy."

The DevelopAid Foundation said that the amendments to the FCRA only create more hurdles and paperwork, especially for charities that are already reeling "from too many disjointed rules".

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