The Foreign Contribution (Regulation) Act, 2010

The Foreign Contribution (Regulation) Act was enacted on 26th September 2010. It has come into force only on 29.04.2011 with effect from notifications in the Official Gazette. This Act has been incorporated in order to prevent mis-utilization of the foreign contribution provided to the association. The prime motive of this Act is to regulate the reception and utilization of foreign contributions, generosity by the person or associations for a noble cause. It also prevents foreign contribution from not being politically influenced by higher officials, public servants, legal authorities, etc. This Act also regulates foreign fund to reaches the organization that serves for public cause by safeguarding the diversions of fund going people with illegal motive.

The person or any association which works for national benefits and public cause should register or get prior permission from Minister of Home Affairs. They make application before the designated authorities by furnishing all necessary details of activities and with audited accounts statements. The Registration will be given only on furnishing all the necessary documents and details. Newly formed organization won’t be having track record but still they can get foreign funds for a specific activities with public interest.

The foreign contribution may be accepted by way of remunerations for an individual or group of individual working under him. They might be accepted even by way of payment in due course of business inside o outside India for international trade and commerce. These foreign funds be accepted by way as an agent of foreign source for work done by him or by way of gifts or presentations as per the rules prescribed by the Central Government. These specific funds from foreign country shall be received by a relative or by way of scholarships or such other payments of like nature.

The Central Government may not allow to accept the foreign contribution if it seems affecting the sovereignty of India, if it affects the public interest if such person or organization accepts the foreign hospitality, if it affects the freedom of election to legislature, if it affects the friendly relationship of the foreign states or such other major issues. Foreign funds received shall be used only for the purpose for which it has been received rather it must not use more than fifty percent for administration purposes as prescribed. The Central Government shall issue a certificate of registration upon seeking permission to accept funds from foreign. This Certificate may not be issued to a benami or fictitious person; it may not be issued to a person convicted for offence affecting the moral turpitude, he must not be convicted in creating any communal tension in any part of the Country, if he has acted controversial to the provision of this Act, etc.

The Central Government if once suspends the certificate of registration cannot be given again during the suspension period unless if it deems fit to grant the certificate on certain conditions prescribed. Once the certificate is cancelled, the certificate will be under the purview of such prescribed authority. This authority if it deems necessary utilize the foreign funds for the benefit of the public interest manages the activities such person for such period mentioned. In case of expiry of the certificate, within six months from the date of expiry it has to be renewed. Ordinarily it will get renewed within ninety days from application date, but in case of non renewal within that period, if the reason is genuine the Central Government can renew the Certificate.

The Person or any association receives foreign contribution through one or more banks wherein the accounts should be only for foreign exchange transactions. An authorized person for foreign exchange should intimate all the necessary details about these transactions in such a manner prescribed.

 The person or association which receives foreign contribution shall maintain all necessary audited statements of accounts and annual reports every year and at any point of time the Central Government can investigate or seize all the necessary documents as prescribed, etc. The aggrieved party shall file application before the magistrate and the Code of Criminal Procedure, 1973 shall apply. An Appeal or revision shall be allowed within sixty days from the date of receipt of the Lower Court Order. There were separate penal provisions available in this Act for declaration of false statements, obtaining the funds in contrary to this Act, etc. No Court shall cognizance the Central Government for any act done in pursuance to this Act in good faith.

This Act has failed to keep pace with liberal exchange control regulations. Crores of Rupees are dumped every year to NGO’s in India from all over the world for establishment expenses, rural development, Children welfare, etc. But Several NGO’s has been getting revoked for their activities against the national interests under this Act. This Act should have curbed such malpractices through proper mechanism rather than penalizing them.

by C.Srivenkatesh Prabhu