What are these FCRA rules ?
FCRA were enforced in 1976 during the time of emergency and there were enactments in 1984 and then finally it was FCRA 2010 act which is basically a Foreign Contribution Regulation Rules 2011. They were enacted in place of Foreign Contribution Regulation Act 1976.
Explain why Foreign Contribution Regulation Act is there ?
the prime reason for enacting this law was to ensure that :-
- Foreign contribution were utilised for bonafide charitable activities without compromising on national security.
- It is also very important that whenever the foreign funds come to India probably some of the foreign funds may be placed with some fraud interests.
- In order to basically have an organised financial planning for NGO’s where national security and charitable activities is kept in mind. So that fund flows will be effective and transparent and actually reaches to intended beneficiaries and that is the one reason why this FCRA was enacted.
What actually went wrong and what has prompted govt to take actions against NGO’s and those who receiving foreign funds ?
- The MHA has claimed that funds were diverted for other use rather than intended use.
- It has also listed other violations such as remittances to foreign countries from FCRA account and also a failure to declare all its bank accounts to government.
- There is also a suspicion in some other agencies also that these funds are being misused
- FCRA report of 2009 and 2010 says that NGO’s sector in India is vulnerable to their risks of money laundering and terrorists funding.
Objective of this whole exercise to :-
- To Regulate NGO’s funding needs despite NGO’s is a very important pillar between the beneficiaries and the govt schemes and also the schemes of private sector to corporate social responsibility.
- There are some unscrupulous NGO’s that are receiving foreign funds that may serve as conduce for money laundering or maybe some other means which are not intended. So this is why this Whole exercise was taken place.
Recent steps taken especially with regard to designating banks and NGO’s or anyone receiving foreign contribution must have account only in those designated banks govt ? what does it means ?
This is one of the welcoming steps which is initiated by govt of india as :-
- There is a report that home ministry states to all NGO’s, companies and individuals also who are receiving foreign funds to open an account in any of the 32 designated banks. and infact you will see one of the bank is foreign bank which is Abu Dhabi bank.
- Another thing is that this has to be done with in a month for high level of transparency and NGO’s also have to ensure that such funds are not socialised for the activities which are detrimental to national interest.
- Last deadline for this is 21st january all the NGO’s have to open an account in any of these banks and they also have to give details of the bank account to home ministry in a prescribed form.
PFMS integrated with banks and advantages :-
- These designated banks are again Integrated with PFMS which is Public financial Management System.
- After integration takes place there will be high level of transparency & there will be hassles free reporting compliance. So this is the one of the best thing that government can do
- There will be some hassles for NGO’s to start with but at the end of day what ever happens the Good NGO’s , Regulated NGO’s & Transparent NGO’s dont have to fear anything because whatever the intentions are there money is going to the beneficiaries
- The one who are running fraud NGO’s they have to worry because there bank accounts will be frozen, no more transactions will happen and the activities they were doing will completely be stopped.
What this PFMS will do ?
- As the total intent of PFMS as we know that now with all govt schemes there integration of PFMS with all these banking services and this system works under Controller General of Accounts in the ministry of finance.
- This is basically providing a financial management platform for all the plans for all the schemes of govt of india and also NGO will be covered under PFMS
- It will also integrate the core banking solutions of banks which are handling plan funds it will also integrate with state treasuries.
- There will be effective tracking of fund flows to the lowest level of implementation for the planned schemes of govt of India and the same thing will happen with NGO’s for getting foreign aid and once there will be proper integration of PFMS with banking system then that there will be much needed transparency, credibility and due diligence in compliance will be initiated by each and every NGO and the end of day beneficiaries and society will be benefited.
What are these violations which led to the cancellation of registered NGO’s ?
FCRA clearly defines that you have to tell the source of funds and how much fund you have utilised in activities and the NGO’s are doing good work and maintaining records and maintaining balance sheets, filing return & if anyone found violating these rules then it clearly led to the cancellation of registered NGO’s..
What steps can be taken by govt to ensure that funds coming from various agencies keep pouring in without impacting the work of genuine NGO’s ?
The unscrupulous elements should be shut out from the total system and suggestions are :-
- Whatever work has been done by any for any project. For exp :- as you see Companies act 2013, where there is a compliance for corporate social responsibility also and if you see the total report the CSR act was enacted in such a way that there is a proper compliance, proper CSR committee which actually do due diligence in terms of doing any of CSR projects. Similarly if same thing happen with NGO’s who are receiving funds in which the CSR committee or you can say senior management of NGO’s they should be held accountable for any lapses or projects in the course of doing any project activity so that can Make NGO’s more versatile in terms of extending their activities and getting more funds from offshore countries.
Lack of NGO’s will Power to register under FCRA :-
- During months of May, when this notifications was given by govt to NGO’s for FCRA registration. it was observed that around close to 18,500 NGO’s they were not regularly filing returns under FCRA for past 5 years and there were given one time opportunity to give the details of income and expenses in the month of may.
- Even Govt has said that no penalty will be paid by defaulters but still 5922 they did not bothered to upload their returns that means they must be having lack of data or source of funds cannot be published in a certain way and there were only 12537 NGO reverted.
- Govt from the last 5 years are putting some thrust on NGO’s to come clean with the system so there should be no mis-happening can be done. After govt failed to reach all the NGO’s to register under FCRA so this has to be bound deadline.
- With this step the new NGO’s are coming in new regime which is totally following ethics, transparency, corporate governance norms they need no to be worried at all.
Other Restrictions can be imposed on Unscrupulous NGO’s :-
- Such NGO’s should be black listed from getting foreign funds or private entities or from govt schemes, or private entities through CSR.
- There checks and balances have to be done in a methodical way. The last elements is that the govt have to done alot of work to know the source of funds to NGO’s and whether the funds are spent for administrative purposes or anti – social activities by NGO’s, Govt needs to keep check on them in detail.