Foreign Contribution (Regulation) Act (FCRA) 2010
Foreign Contribution (Regulation) Act (FCRA) 2010 is an Act of the Indian Parliament that envisages twin objectives. FCRA Act 2010 is a consolidation of the laws regulating the acceptance and utilization of foreign contribution or foreign hospitality for certain purposes. Simultaneously, the Act prohibits acceptance and utilization of foreign contribution or foreign hospitality for any activity detrimental to national interest. The individuals or associations or companies that accept foreign contribution are required to abide by the provisions of the Act. Foreign Contribution (Regulation) Act (FCRA) 2010 also binds banks to ensure compliance of the provisions of the Act while facilitating receipt of remittance.
Who comes under the purview of FCRA Act 2010?
The FACRA Act is applicable to
a. The whole of India,
b. The Indian citizens inside and outside the country,
c. To the branches of banks, inside and outside the country and
d. To the subsidiaries of banks outside India.
The provisions of the act are periodically revised / amended through notifications or orders to keep it relevant for the evolving environment. Thus, Foreign Contribution (Regulation) Act, 2010 and Foreign Contribution (Regulation) Rules, 2011 along with related notification / orders control the flow of foreign contribution to India.
How does FCRA Act 2010 control Foreign Contribution?
The Foreign Contribution (Regulation) Act, 2010 carries out its objectives through clearly defined norms. It makes both the recipient of contribution and the banks facilitating receipt of such contributions to obey by the provisions.
Responsibility of recipients under Foreign Contribution (Regulation) Act (FCRA) 2010
i. FCRA Act prohibits certain classes of persons from receiving ‘foreign contribution’ (FC)
ii. FCRA Act restricts certain classes of persons from accepting foreign hospitality while visiting any country or territory outside India, without the prior permission of the Central Government
iii. FCRA Act requires that persons having definite cultural, economic, educational, religious and social programmes should get themselves registered with the Government of India before accepting any foreign contribution. If the person eligible to receive foreign contribution has not registered with Government, he should obtain prior permission of the Central Government before accepting such contribution.
iv. FCRA Act empowers Central Government to prohibit any person or organisation not specified in the Act from accepting any foreign contribution.
v. FCRA Act also requires any person or class of persons, not specified in the Act to obtain prior permission of the Central Government before accepting any foreign hospitality.
vi. The eligible persons shall obtain a registration certificate/ prior permission from central government and shall abide by the norms of said registration. They shall route the receipt only through the account mentioned in the application. They shall not route or deposit any other funds in the account. Such recipients shall intimate the Central Government the details of contribution received as specified in Section 18 of the Act. A copy of the statement indicating the particulars of foreign contribution received duly certified by an officer of the bank or authorized person in foreign exchange shall also be provided.
Responsibility of Bankers under Foreign Contribution (Regulation) Act (FCRA) 2010
While FCRA Act 2010 makes recipients to abide by its provisions, the banks facilitating such receipts are also bound to obey certain provisions.
i. FCRA Act 2010 stipulates that banks shall facilitate receipt of foreign contribution only in the account approved by the Central Government and specified in the certificate/ permission issued to the recipient. They shall have systems and process in place to prevent routing of transactions other than foreign contribution through the account.
ii. FCRA Act 2010 demands that every bank or authorized person in foreign exchange shall report to specified authority, the amount of foreign remittance, source and manner in which foreign remittance was received and other particulars. The details shall be furnished in the format as specified from time to time.
iii. FCRA ACT 2010 demands that banks shall credit foreign contribution received by way of Foreign Remittances, Foreign Cheques/ Draft towards charity, religious , educational institution or establishments etc only in the designated account.
