What is FCRA, and when can an NGO’s registration be cancelled?

FCRA seeks to “regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit [such] acceptance and utilisation…for any activities detrimental to the national interest…”

The law was enacted during the Emergency in 1976 amid apprehension that foreign powers were interfering in India’s affairs by pumping in funds through independent organisations. These concerns had been expressed in Parliament as early as in 1969. The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.

An amended FCRA was enacted under the UPA government in 2010. The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs. A legal challenge to the 2020 amendments was rejected by the Supreme Court in April this year.

Provisions of the Act

Broadly, the FCRA requires every person or NGO wishing to receive foreign donations to be registered under the Act, to open a bank account for the receipt of the foreign funds in State Bank of India, Delhi, and to utilise those funds only for the purpose for which they have been received, and as stipulated in the Act.

They are also required to file annual returns, and they must not transfer the funds to another NGO.

The Act prohibits receipt of foreign funds by candidates for elections, journalists or newspaper and media broadcast companies, judges and government servants, members of legislature and political parties or their office-bearers, and organisations of a political nature.

Registration under FCRA

NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation. FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.

Following the application, the MHA makes inquiries through the Intelligence Bureau into the antecedents of the applicant, and accordingly processes the application. The MHA is required to approve or reject the application within 90 days — failing which it is expected to inform the NGO of the reasons for the same.

Once granted, FCRA registration is valid for five years. NGOs are expected to apply for renewal within six months of the date of expiry of registration. In case of failure to apply for renewal, the registration is deemed to have expired.

Cancellation of approval

The government reserves the right to cancel the FCRA registration of any NGO if it finds it to be in violation of the Act. Registration can be cancelled for a range of reasons including, if “in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate”. Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years. All orders of the government can be challenged in the High Court.