FCRA Amendment- Expanding the scope and coverage of Act

On 23rd September, 2020, The Upper and lower houses of parliament had passed the Foreign Contribution (Regulation) Amendment Act, 2020. The amendment is intended to put in prohibition on acceptance of contributions by Public Servant, transfer of foreign contribution to any persons, making Aadhar mandatory to the office bearers of the recipients of Foreign Contributions, designating a single account for acceptance of the contributions, restrict usage of unutilised foreign contribution for persons who have been granted prior permission to receive such contribution, time limit for applying renewal of registration etc.

Prohibition on Public Servants

Foreign Contribution Regulation Act prohibits acceptance of Contribution, in cash or in kind, by certain category of persons such as election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others, from Foreign Sources. The amendment Act brings “Public Servant” also within the purview of regulated persons, whereby explicitly prohibits, the public servants within in the meaning of Section 21 of the Indian Penal Code to accept any article, other than a gift for personal use, from any foreign source. The Act prohibits acceptance of contributions by the above category of persons in indirect manner also.

Prohibition on transfer of 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 Act 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. As per the amendment, the foreign contribution accepted under the provisions of the Act, cannot be given to any person, even if such person is registered to accept foreign contribution.

The words “public servant” as per Section 21 of the Indian Penal Code, denote a person falling under any of the descriptions hereinafter following, namely:

  1. Every Commissioned Officer in the Military, Naval or Air Forces of India

  2. Every Judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons. any adjudicatory functions;

  3. Every officer of a Court of Justice (including a liquidator, receiver or commissioner) whose duty it is, as such officer, to investigate or report on any matter of law or fact, or to make, authenticate, or keep any document, or to take charge or dispose of any property, or to execute any judicial process, or to administer any oath, or to interpret, or to preserve order in the Court, and every person specially authorized by a Court of Justice to perform any of such duties;

  4. Every juryman, assessor, or member of a panchayat assisting a Court of Justice or public servant;

  5. Every arbitrator or other person to whom any cause or matter has been referred for decision or report by any Court of Justice, or by any other competent public authority;

  6. Every person who holds any office by virtue of which he is empowered to place or keep any person in confinement;

  7. Every officer of the Government whose duty it is, as such officer, to prevent offences, to give information of offences, to bring offenders to justice, or to protect the public health, safety or convenience;

  8. Every officer whose duty it is as such officer, to take, receive, keep or expend any property on behalf of the Government, or to make any survey, assessment or contract on behalf of the Government, or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests of the Government, or to make authenticate or keep any document relating to the pecuniary interests of the Government, or to prevent the infraction of any law for the protection of the pecuniary interests of the Government;

  9. Every officer whose duty it is, as such officer, to take, receive, keep or expend any property, to make any survey or assessment or to levy any rate or tax for any secular common purpose of any village, town or district, or to make, authenticate or keep any document for the ascertaining of the rights of the people of any village, town or district;

  10. Every person who holds any office in virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election;

  11. Every person

  12. in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government;

  13. in the service or pay of a local authority, a corporation established by or under a Central, Provincial or State Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956).

Aadhaar for registration

The Act states that a person may accept foreign contribution if they have: (i) obtained a certificate of registration from central government, or (ii) not registered, but obtained prior permission from the government to accept foreign contribution. Any person seeking registration (or renewal of such registration) or prior permission for receiving foreign contribution must make an application to the central government in the prescribed manner. The Bill adds that any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document. In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.

Dedicated 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 Act 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. No funds other than the foreign contribution should be received or deposited in this account. The person may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.

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. The Amended Act adds that the government may also restrict usage of unutilised foreign contribution for persons who have been granted prior permission to receive such contribution. This may be done if, based on a summary inquiry, and pending any further inquiry, the government believes that such person has contravened provisions of the Act.

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. The Amended Act provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application: (i) is not fictitious or benami, (ii) has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion, and (iii) has not been found guilty of diversion or misutilisation of funds, among others conditions. Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days. The Amended Act adds that such suspension may be extended up to an additional 180 days.

The amendment to the FCR Act, is to widen the scope and coverage of the Act and also to ensure more effective implementation of the existing provisions.


Bijoy P Pulipra

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