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Context: The Center for Policy Research's Foreign Contribution Regulation Act (FCRA) licence has been suspended by the Union Government (CPR).

Foreign Contribution Regulation Act

  • The FCRA was enacted in 1976 to regulate foreign money into the country through independent organizations.
  • The Foreign Contribution Regulation Act was amended by the Indian Parliament in 2010.
    • To effectively regulate the foreign contribution by individuals or associations or companies.
  • The Union Minister of Home Affairs introduced the Foreign Contribution (Regulation) Amendment Bill in 2020, which made several changes.

Foreign Contribution (Regulation) Amendment Act, 2020

  • The Act regulates the acceptance and utilization 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.
  • Prohibition to accept foreign Contributions: Certain persons are prohibited to accept any foreign contribution. These include;
    • Election candidates, editors or publishers 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. A public servant includes any person who is in service or paid by the government or remunerated by the government for the performance of any public duty.
  • Transfer of foreign Contributions
    • Foreign contributions cannot be transferred to any other person unless such person is also registered to accept foreign contributions (or has obtained prior permission under the Act to obtain foreign contributions).
    • The Act prohibited the transfer of foreign contributions to any other person. The term ‘person’ under the Act includes an individual, an association, or a registered company.
  • Aadhar for registration
    • Any person seeking registration (or renewal of such registration) or prior permission for receiving a foreign contribution must make an application to the central government in the prescribed manner.
    • The Act adds that any person seeking prior permission, registration or renewal of registration must provide the Aadhar number of all its office bearers, directors or key functionaries, as an identification document.
    • In the case of a foreigner, they must provide a copy of their passport or the Overseas Citizen of India card for identification.
  • FCRA Account
    • Foreign contributions must be received only in an account designated by the bank as an “FCRA account” in such a 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 utilizing the received contribution.
  • Restriction in the utilization of foreign contributions
    • The Government may restrict the usage of unutilized foreign contributions for persons who have been granted prior permission to receive such contributions.
  • Renewal of licence
    • Every person who has been given a certificate of registration must renew the certificate within 6 months of expiration.
    • The Act provides that the government may conduct an inquiry before renewing the certificate.
  • Reduction in the use of foreign contributions for administrative purposes
    • A person who receives a foreign contribution must use it only for the purpose for which the contribution is received.
    • They must not use more than 20% of the contribution for meeting administrative expenses (earlier it was 50%).
  • Suspension of Registration
    • Earlier governments may suspend the registration of a person for a period not exceeding 180 days.
    • The Act adds that such suspension may be extended up to an additional 180 days.
  • The Union government reserves the right to cancel the FCRA registration of any NGO if it finds it to violate the Act.
    • Registration of the NGO can be cancelled for a range of reasons. Once the registration is cancelled, it is not eligible for re-registration for three years.
    • All orders of the government can be challenged in the High Court.


Q. Consider the following Statements;

1.  Election candidates can receive foreign contributions.

2. Political Parties can receive foreign contributions.

Which of the following Statement is/are correct?

(A) 1 only

(B) 2 only

(C) Both 1 and 2

(D) Neither 1 nor 2

Answer: D


Under the Foreign Contribution (Regulation) Amendment Act, of 2020,  Certain persons are prohibited to accept any foreign contribution. These include; Election candidates, editors or publishers of a newspaper, judges, government servants, members of any legislature, and political parties, among others.