In a major regulatory shift, the government has revised penalties for violations under the Foreign Contribution (Regulation) Act (FCRA), 2010, involving the receipt and utilisation of foreign contributions by non-governmental organisations, according to a gazette notification.
Notified by the Home Ministry on Monday, the updated rules clamp down hard on administrative expenses. Under the new guidelines, NGOs that breach the legal 20 per cent cap on administrative spending will be hit with a steep penalty: either Rs 1 lakh or 5 per cent of the overspent amount, depending on which figure is higher.
The utilisation of foreign contribution in speculative activities, in contravention of section 8(1) of the Act read with rule 4 of the Foreign Contribution (Regulation) Rules, 2011, will now attract a penalty of Rs 1 lakh or 30 per cent of the amount invested in such activities, whichever is higher. In addition, 100 per cent of the returns earned therefrom shall be recovered, the notification said.
A similar penalty will also be slapped in cases of accepting or utilising foreign contributions in contravention of the Act, or utilising the funds for a purpose or in a state or a Union Territory for which registration has not been granted, it said.
In a separate notification on Monday, the government also amended the rules for receiving foreign funds, requiring NGOs to choose from a predefined list of purposes and their areas of operation, allowing a range of faith-based activities, while explicitly excluding proselytisation from several categories eligible for registration under the Act.
The ministry also said any association having foreign nationals, other than those of Indian origin, as its key functionaries will "ordinarily not be considered" for the grant of registration or prior permission to receive foreign funds under the Act.
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The amended rules carved an exception, allowing the government to specify such cases or circumstances through an order in which foreign nationals may be permitted to be "key functionaries" of an association for registration or prior permission under the FCRA, the notification said.
The government has notified a number of amendments in the FCRA Rules, 2011, tightening the accountability for how NGOs and other associations in India receive and use foreign money.
The amendments have broadened the definition of "key functionary in relation to a person other than an individual" to cover a wide range of roles, including company directors, partners in firms, trustees, the "Karta" of a Hindu Undivided Family and any person who has control over the management of the association.
The government has introduced a new clause wherein NGOs seeking registration for receiving foreign funds will have to specify the exact purpose and the states and Union territories of its operations.
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