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Law to tighten foriegn contributions

The government cleared the proposed law to tighten the regulation of foreign contributions into the country, reports Aloke Tikku.

india Updated: Nov 10, 2006 05:36 IST

The government on Thursday cleared the proposed law to tighten the regulation of foreign contributions into the country that incorporates provisions for suspending and cancelling registrations of non-governmental organisations flouting the rules.

In its fresh form, the Foreign Contribution (Regulation) law places a complete ban on organisations of political nature other than political parties from receiving foreign contributions. The 1976 version of the FCRA Act allowed them to receive foreign funding with prior permission of the central government.

The proposed law intends to retain penal provisions stipulating a jail term for offenders but incorporates provisions for compounding certain offences where the accused can be let off on payment of a fine.

The proposed FCRA Bill 2006 also makes it mandatory for banks to submit annual reports to the government on foreign funds received under this law by its customers. There will also be a provision on banks sharing information at more frequent intervals about transactions beyond a specified limit or suspicious transactions with the designated authority. This authority, in turn, would share this information with security agencies.

A home ministry official said the specified limit in this case would be set at Rs 5 lakh in the first instance; repeat inward remittances from the same or different foreign sources would be treated as suspicious transactions in this context.

The government also intends to limit the validity of registration under this law to five years and introduce a fee. So far, registrations were permanent and without a charge.

The new set of proposals also empower the Centre to lay down the process for disposing of assets created out of foreign contributions where the organisation is wound up.

The government has also introduced the concept of cancelling and suspending registrations under this law for violations. The home ministry had earlier proposed imposing an upper limit of 90 days for suspensions; on the recommendation of the group of ministers that examined this law during the year this limit has been raised to 180 days.

But in line with concerns of the NGO sector, made it clear that the registrations would be automatically renewed except for defaulters. Recipients would also be allowed to utilise the foreign contributions through more than one bank. The government has also accepted the demand that the power of registration or the regulation of their funds not be delegated to district collectors as had been proposed earlier.

MHA officials said this would now be done at a central level only. It had proposed to open five regional offices but the group of ministers had suggested that this may not be necessary once the ministry made the registration process online.

The draft bill also introduces a cap of 50 per cent on utilising foreign funds for administrative purposes, a move that is unlikely to go down well with the voluntary sector. The finance ministry had opposed this cap but the government eventually stuck to this upper limit. There is, however, a provision that empowers the government to exempt NGOs from this limit on a case-to-case basis.


First Published: Nov 10, 2006 05:36 IST