NGOs to face tighter forex scrutiny soon
CHENNAI: The Union home ministry is preparing to tighten its grip on non-governmental organisations (NGOs) that receive funds in foreign exchange with a proposed draft amendment to the Foreign Contribution Regulation Act (FCRA) making it mandatory for banks to report to the ministry within 48 hours of forex remitted to accounts of such entities that lack FCRA registration.
The amendment stipulates that NGOs or individuals receiving foreign contributions submit details of funds within seven days of receiving them on their officially declared websites or the site prescribed by the Centre. The amendment makes it mandatory for NGOs to submit their annual accounts to the ministry.
The ministry’s move to amend the act follows its recent cancellation of the registration of more than 1,000 NGOs. Its main aim remains to make changes to the FCRA – a worry for many organisations – for more transparency in donations that NGOs receive in foreign exchange.
“The amendments are meant to promote transparency in the receipt and utilisation of foreign contributions by these organisations as well as the reporting mechanism of banks by using available information technology,” a ministry official said.
The amendments will also improve the existing system of receipt of requests for registration, prior permission and renewal of registration under FCRA, he said.
If the government approves the amendments and has them notified in the gazette, new NGOs seeking FCRA registration will only be able to do so online after obtaining a digital signature.
“The applicant should upload the digitally signed application with scanned documents within the timeframe as prescribed by the Centre [within the timeframe applicable],” the draft amendment says. Banks must intimate the ministry about forex remittances to FCRA-registered NGOs within 48 hours.
All NGOs that receive foreign exchange will have to re-register or renew registration by March 2016. If the Centre amends the FCRA before next March, not many NGOs will have permission to receive foreign exchange.
“The proposed move to amend the act is welcome for the sake of transparency,” said K Shivakumar, treasurer of Voluntary Action Network India (an association that represents NGOs). Making it compulsory for NGOs to report details on foreign exchange received and spent on a daily basis, however, will only interfere in their functioning, including those with bona fide intentions, he said.
The ministry aims to stifle NGOs and reduce their numbers through the amendments, Development Promotion Group head R Bhakther Solomon said. “To demand the furnishing of details of foreign exchange receipts and spending is asking for too much,” he said. “Banks are likely to find it tedious to dispatch such details to the ministry on a daily basis.” It may be viable for banks to send quarterly details instead, Solomon said.
The ministry has sought comments from stakeholders before July 1, after which the Centre could make amendments to the FCRA.