The Ministry of Home Affairs (MHA) has amended the penalties imposed for various violations under the Foreign Contribution (Regulation) Act, 2010 (FCRA), which governs the receipt and utilization of foreign contributions.
The Government of India has introduced stricter regulations governing the receipt and use of foreign funds by non-governmental organisations (NGOs). Through amendments to penalties under the FCRA, the Ministry of Home Affairs has taken steps aimed at increasing accountability and transparency.
Under the revised provisions, higher financial penalties will be imposed for misuse of foreign funding, administrative expenditure beyond the prescribed limit, and the use of funds for unauthorized activities. Changes have also been made to the application process and eligibility criteria for receiving foreign contributions.
Under the amended rules, organisations that spend more than 20 per cent of foreign contributions on administrative expenses will be subject to penalties. In such cases, the penalty will be ₹1 lakh or 5 per cent of the amount spent beyond the prescribed limit, whichever is higher.
The government has stated that foreign contributions should primarily be used for social, educational, health-related or developmental purposes rather than excessive administrative expenditure.
The revised rules provide for stricter action against the use of foreign funds in speculative, high-risk financial activities or betting-related activities. In such cases, a penalty of ₹1 lakh or 30 per cent of the amount involved, whichever is higher, will be imposed.
In addition, the entire income or profit earned from such activities may be confiscated by the government. The provision has been introduced to prevent financial misuse of foreign contributions.
Organisations that receive foreign funds for a specific project or purpose and use them for other activities will also face penalties. In such cases, a penalty of ₹1 lakh or 30 per cent of the amount involved, whichever is higher, will apply.
Similarly, accepting foreign contributions without valid registration, using such funds outside the approved scope, or spending them on activities different from those declared during registration will attract penalties.
The Ministry of Home Affairs has issued new guidelines to make the application process for foreign funding more structured and transparent.
Organisations applying for FCRA registration or prior permission will now be required to clearly select their area of work and objectives from a government-prescribed list.
These objectives include religious, cultural, social, economic and educational activities.
However, activities related to religious conversion have been excluded from the eligible categories. According to the government, the objective of this measure is to make the use of foreign funding more transparent and easier to monitor.
The amended rules also introduce changes relating to key office-bearers of organisations. Applications for FCRA registration or prior permission from organisations whose top management includes foreign nationals will ordinarily not be considered.
However, the Central Government will retain the authority to grant exceptions in special circumstances. The government may issue orders in specific cases permitting foreign nationals to serve as key office-bearers of an organisation.
The definition of “Key Functionary” has also been expanded under the new rules. It now includes company directors, partners in partnership firms, trustees, the karta of a Hindu Undivided Family (HUF), and other individuals who exercise control over the management or policy decisions of an organisation.
