Foreign Contributions Regulations Bill 2010 becomes law in India

7 April 2011

Update provided by Noshir Dadrawala of the Centre for Advancement of Philanthropy.

The Foreign Contributions Regulations Bill 2010, earlier passed by both houses of the Parliament, has received the President’s assent retrospectively effective as of 27 September 2010, making the new FCRA 2010 law. It now replaces the earlier Act of 1976.

Two changes in the New Act should make NGOs rejoice:

  • NGOs will now be allowed to maintain multiple bank accounts provided only one exclusive bank account is maintained for receiving/channeling all foreign contribution; and,
  • Both, ‘Registration’ and ‘Prior Permission’ shall be granted or rejected within a period of 90 days from the date of receipt of application. Earlier, this time limit was provided under law, only for disposal of ‘Prior Permission’ applications.

However, four other changes in the New Act should be a cause of concern for NGOs:

  • Section 3 specifies persons who are ineligible to receive foreign contribution. Of particular concern is the inclusion of “Organization[s] of a political nature." Since the term ‘political nature’ has not been defined there is reason for NGOs involved in advocacy, activism, etc., to feel a bit concerned;
  • Administrative expenses should not exceed 50% and any expenditure of administrative nature in excess of 50% shall be defrayed with prior approval of the Central Government;
  • Registration under FCRA will require renewal every 5 years. However, the Act has provided relief to all the existing NGOs for the first 5 years from the date of enactment. Registration of all NGOs already registered under FCRA 1976 will be deemed to expire on 27 September 2015. It is recommended that NGOs that are already registered under FCRA 1976 apply for renewal around March 2015, i.e. at least 6 months prior to the deemed expiry date; and,
  • Registration may be cancelled for various reasons including lack of activity for a period of 2 years.