Presentation on theme: "FOREIGN CONTRIBUTION (MANAGEMENT & CONTROL) BILL,2005 Implications on NGO’s SUDHIR VARMA FCA; CIA(USA) For Forum for Ethics, Accountability and Transparency."— Presentation transcript:
FOREIGN CONTRIBUTION (MANAGEMENT & CONTROL) BILL,2005 Implications on NGO’s SUDHIR VARMA FCA; CIA(USA) For Forum for Ethics, Accountability and Transparency 20 th to 23 rd February 2006, Jaipur
FOREIGN FUNDS IN INDIA - To the Government - In Business / Trade - In the Development Sector
FOREIGN FUNDS IN INDIA - With the GovernmentNo Controls - In Business / TradeFERA - In the Development SectorFCRA
FOREIGN FUNDS IN THE DEVELOPMENT SECTOR For Charitable Activities For Research For Development For Capacity Building
FOREIGN FUNDS – WHY CONTROLS For Anti-Government Activities For Anti-National Activities
FOREIGN CONTRIBUTION REGULATION ACT Introduced in 1997 For Anti-Government activities Little thought was given to the development sector - On their working - Their issues - Their concerns
DEMAND FOR CHANGE IN FCRA Pressure from the Development Sector. Changes asked for were not specific
IN 1999 FERA WAS CHANGED TO FEMA Diluting controls Reducing paperwork Diluting penalties Government to be a watch dog.
CHANGE IN FERA – CIRCUMSTANCES Growth in International Business / Trade Increase in consumerism Rise in standard of living Industry happy People happy Government happy
COROLLARY TO CHANGE IN FERA Change FCRA Bring similar changes
DEVELOPMENT SECTOR – CIRCUMSTANCES NGO’s work better than Government Agencies NGO’s give better end results NGO’s set bad precedents for comparisons with Government data. NGO’s have started questioning Government policies NGO’s have started embarrassing the Government CAN NGO’S EXPECT GOVERNMENT SUPPORT AND UNDERSTANDING.
FCRA TO BE REPLACED THROUGH FOREIGN CONTRIBUTION (MANAGEMENT AND CONTROL) FC(MC) BILL, 2005 FC(MC) is a change from FCRA, not necessarily for the better. The intent of the Government - is not clear - is not transparent.
WITH THE NEW ACT, THE GOVERNMENT HAS ENSURED THAT THEY HAVE More interaction with NGO’s More control over - the working of NGO’s - the funds of NGO’s. More intervention in the working of NGO’s.
APPREHENSIONS OF NGO’S Some are well-founded Some are exaggerated.
IMPLICATIONS OF FC(MC) REGISTRATION RENEWALS UTILISATIONS OF FUNDS SUSPENSION / CANCELLATION
IMPLICATIONS OF FC(MC) REGISTRATION
RE-REGISTRATION Old registration not valid for more than 2 years. New registration not automatic Registrations shall be done afresh. Norms and rules for new registration have not yet been defined. Registration from date of application or for financial years.
NEW REGISTRATIONS Valid for 5 years at a time. Perpetual existence under threat. Continuity of projects not assured. - Hospitals - Educational Institutions - Vocational Training Centers Scope of activity gets restricted
NEW REGISTRATIONS New entrants not allowed. “Has done meaningful activity in the field” Provisions for enquiry defined Wide and open to interpretation Officer can call for information Officer can examine any person.
NEW REGISTRATION A fee has been prescribed Reasons for refusal have to be communicated. NGO’s can appeal against refusal. Time limit for disposal of appeal not define. Justice delayed is justice denied.
IMPLICATIONS OF FC(MC) RENEWALS
Required every 5 years Applications can be made after 3 years i.e. 2 years in advance. Gaps between expiry and renewal of registration. Renewals from date of application or for financial years. More than 30,000 registrants at present Can they be renewed IN TIME.
IMPLICATIONS OF FC(MC) UTILISATIONS OF FUNDS
UTILIZATIONS OF FUNDS MULTIPLE BANK ACCOUNTS FC Funds continue to be received in one designated bank account. Subsequently funds can be transferred to other bank accounts - For different locations - For different projects But subsequent bank accounts - will be used exclusively for Foreign Funds - Foreign Funds shall not be directly received in these bank accounts
UTILIZATIONS OF FUNDS MULTIPLE BANK ACCOUNTS Long outstanding demand of donors to keep their funds in a separate bank account can now be met. A separate bank account can be assigned to each donor, if desired.
FC FUNDS Definition of Foreign contribution enlarged. Interest earned on FC Funds shall be deemed to be FC Funds Income earned from FC Funds shall be deemed to be FC Funds. Distinction required between - Income earned from FC Funds - Income earned from Assets / Facilities acquired from FC Funds.
UTILISATIONS OF FUNDS FC Funds can be used only for the purpose for which they have been received. Only 30% of FC Funds can be used for Administrative Expenses.
ISSUES FC Funds received for Administrative Expenses. Definition of Administrative Expenses. - Administration Expenses of a program - Administration Expenses of the Institution.
FIXED ASSETS ACQUIRED FROM FC FUNDS Governments intervention to decide - Which assets can be disposed off. - Manner of disposal. - Procedure of disposal. These decisions are not left with the donor. On suspension / cancellation of registration these assets can be seized by a Local Magistrate / Police Station.
IMPLICATIONS OF FC(MC) SUSPENSION / CANCELLATION OF REGISTRATION Registrations can be suspended or cancelled. An opportunity will be given before passing such an order. Suspension can be for 90 days. Cancellation shall be effective for atleast 3 years before an application for re-registration can be made.
IMPLICATIONS OF FC(MC) ON SUSPENSION / CANCELLATION OF REGISTRATION The Government can take charge of all un-utilized FC Funds. The Government can also seize assets acquired by FC Funds. On going activities / projects can be stalled.
OFFICE BEARERS No person who has been prosecuted can be on the board of Registered Institutions. These persons cannot be on the board of registered institutions even if any proceedings are pending in a court of law.
TIME LIMIT No time limit has been prescribed for accepting or rejecting an application for - Prior permission - Registration - Renewal
FOREIGN CONTRIBUTION (MANGEMENT AND CONTROL) ACT Should be released alongwith the FOREIGN CONTRIBUTION (MANAGEMENT AND CONTROL) RULES