FCRA: Govt restricts funding by 10 foreign agencies to Indian NGOs

Sep 16, 2021 03:11 AM IST

The ministry of home affairs (MHA) redflagged 10 foreign agencies, placing them in prior reference category, which bars them from funding Indian NGOs without the central government’s permission under FCRA law.

New Delhi: The Union government has put 10 foreign donor agencies based in the US, Europe and Australia under the “Prior Reference Category”, restricting any funding by them to Indian non-governmental organisations (NGOs) or individuals without the approval of ministry of home affairs (MHA), people familiar with the development said. The action was taken under the Foreign Contribution Regulation Act (FCRA).

Action under FCRA: The government has taken action against several foreign agencies under the FCRA rules, restricting them from funding Indian NGOs without specific approval from the government
Action under FCRA: The government has taken action against several foreign agencies under the FCRA rules, restricting them from funding Indian NGOs without specific approval from the government

These include US entities Omidyar Network, supported by e-Bay founder Pierre Omidyar and involved in social impact funding across sectors in India, Stardust, and Humanity United; the European Climate Foundation; the UK-based Freedom Fund, Children’s Investment Fund Foundation, Laudes Foundation and Legatum Fund; and Australia-based organisations Walk Free Foundation (WFF), and Minderoo.

A circular to this regard was sent by the Reserve Bank of India (RBI) to all the banks on July 1.

“RBI has instructed that any fund flow from these donor agencies to any NGO/voluntary organizations/associations/person(s) in India should be brought to the notice of ministry of home affairs so that the funds are allowed to be credited to the accounts of the recipient only after clearance/prior reference from FCRA Wing,” the circular stated.

A senior ministry of home affairs (MHA) official confirmed the development on Wednesday evening.

“A lot of audits which were pending due to Covid-19 were done, and foundations which are indulging in work other than what they have mentioned in their FCRA documents have been put under the prior reference category. This is a routine exercise,” he said.

HT reached out to Omidyar Network, Laudes, Minderoo, Walk Free, Legatum, European Climate Foundation, and Children’s Investment Fund Foundation for comments, which were awaited at the time of going to print.

Over the last few years, the government has taken action against several international organisations including Greenpeace, Amnesty International, Human Rights Watch, Compassion International, and Open Society Foundation. Amnesty and Greenpeace have shut their India operations.

According to the amended FCRA rules, which were tightened in September 2020, any association with specific religious, educational, economic, cultural and social activities require FCRA registration or prior reference from the MHA before they can receive or utilise foreign contribution. Moreover, foreign contribution to such entities should be credited to a designated FCRA account, and no other transaction should be allowed in such designated accounts.

On tightening FCRA rules, the government said last year that “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 reference under the said Act”.

It added that many of these recipients were found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts, which has led to a situation where the central government had to cancel certificates of registration of more than 19,000 recipient organisations, including NGOs, during the period between 2011 and 2019. Criminal investigations were also initiated against dozens of such non-governmental organisations which indulged in outright misappropriation or misutilisation of foreign contribution.

According to a reply by the MHA in Parliament on August 10, 22,691 NGOs are registered or granted prior reference by central government for receipt and utilisation of foreign contribution including relief supplies from foreign sources.

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