Amendment in the year 2010

Foreign Contribution (Regulation) Act 2010 (FCRA 2010) was passed by Rajya Sabha on 19th August 2010 with a view to replace the Foreign Contribution (Regulation) Act 1976.

The Foreign Contribution (Regulation) Act, 2010 has come into effect from May 1, 2011. The Ministry of Home Affairs has issued the necessary Gazette Notification vide S.O. 999 (E) dated the 29th April, 2011 in this regard.

The Ministry of Home Affairs has also issued a Gazette Notification vide G.S.R. 349 (E) dated the 29th April, 2011 notifying the Foreign Contribution (Regulation) Rules, 2011 made under section 48 of FCRA, 2010.The FCR Rules, 2011 have come into force simultaneously with FCRA, 2010 i.e w.e.f 1st May, 2011.

The new FCRA, 2010 has a much broader applicability; it is applicable to individuals, Hindu Undivided Family (HUF), Association and a section 25 company. In the earlier Act, the term person was not defined and generally the Act referred to the term ‘Association’.

The FCRA is amended to remove some inadequacies and practical difficulties in administration of the Act.

For instance Section 17 of FCRA 2010 provides that multiple bank accounts can be opened for the purposes of utilization provided only one bank account is maintained for receiving foreign contribution. This amendment provides a great relief to all the NGOs which were struggling under the arbitrary disallowance of multiple bank accounts under FCRA, 1976. Another relief is the time limit for processing an application for registration. In the old FCRA there was no time limit but section 12 of the FCRA 2010, provides the time limit and applications for registration have to be processed within 90 days. The FCRA department shall also provide reasons for rejections.