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Journalists, politicians, judges can't accept foreign money under FCRA

Sahil Makkar/ 21 Apr 17 | 02:02 PM

On Wednesday, the Union home ministry cancelled the Foreign Contribution Regulation Act (FCRA) licence of the Public Health Foundation of India (PHFI), the country’s largest public health advocacy group, on the premise that the organisation was diverting funds and was involved in lobbying with politicians and the media. This is not the first time the ministry has cancelled FCRA license of a non-profit organisation. It has prohibited NGOs like Sabrang Trust, Lawyers Collective and Greenpeace in the past on similar grounds. According to information laid in Parliament, registration certificates of more than 10,000 NGOs have been cancelled from 2014-15 to 2016-17 for violation of FCRA. The government said the FCRA registrations were cancelled mainly on account of non-filing of annual returns as mandated in the Act. It is believed that around 20,000 NGOs have lost their FCRA licences under the new regime.  

Business Standard looked at the Act and compiled information about people who could take foreign funding and under which circumstances they were allowed to spend this money.

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Who can receive foreign contribution?

Any individual, Hindu Undivided Family, association or a company registered under Section 25 of Companies Act 1956 (Now Section 8 of Companies Act, 2013) can receive foreign contribution, subject to the following conditions: 

a) It must have a definite cultural, economic, educational, religious or social programme.

b) It must obtain the FCRA registration/prior permission from the Central Government

c) It must not be prohibited under Section 3 of FCRA, 2010.

Who cannot receive foreign contribution?

 As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:

(a) a candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;

(c) Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government;

(d) member of any legislature;

(e) political party or office bearer thereof;

(f) organisation of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.

(g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (i) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;

(h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g).

(i) individuals or associations who have been prohibited from receiving foreign contribution.

What is a foreign source?

Foreign source, as defined in Section 2(1) (j) of FCRA, 2010 includes:-

(i) the Government of any foreign country or territory and any agency of such Government;

(ii any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification, specify in this behalf;

(iii) a foreign company;

(iv) a corporation, not being a foreign company, incorporated in a foreign country or territory;

(v) a multi-national corporation referred to in Section 2(g) sub-clause (iv) of FCRA, 2010;

(vi) a company within the meaning of the Companies Act, 1956, and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:- a. the Government of a foreign country or territory; b. the citizens of a foreign country or territory; c. corporations incorporated in a foreign country or territory; d. trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory; e. Foreign company;

(vii) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory;

(viii) a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign country or territory;

(ix) a society, club or other association or individuals formed or registered outside India;

(x) a citizen of a foreign country;"

NOTE – A few bodies/ organisations of the United Nations, World Bank and some other International agencies/multilateral organisations are exempted from this definition, and are not treated as foreign source. Hence, the funds received from them are not considered as foreign contribution. List of such bodies/organisations, which are not treated as ‘foreign source’, are available on the website

What are the conditions to be met for the grant of registration and prior permission?

In terms of Sec.12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission:

(a) The 'person' making an application for registration or grant of prior permission-

i. is not fictitious or benami;

ii. has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;

iii. has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;

iv. has not been found guilty of diversion or misutilisation of its funds;

v. is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;

vi. is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;

vii. has not contravened any of the provisions of this Act;

viii. has not been prohibited from accepting foreign contribution;

ix. the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.

x. the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.

(b) the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially –

i. the sovereignty and integrity of India;

ii. the security, strategic, scientific or economic interest of the State;

iii. the public interest;

iv. freedom or fairness of election to any Legislature;

v. friendly relation with any foreign State;

vi. harmony between religious, racial, social, linguistic, regional groups, castes or communities.

(c) the acceptance of foreign contribution-

i. shall not lead to incitement of an offence;

ii. shall not endanger the life or physical safety of any person.

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