(i) FCRA was enacted in 1976. The main purpose was to curb the use of foreign funds and hospitality for nefarious and anti-national purposes.

(ii) FCRA is an internal security legislation and is not regulated by RBI. It is regulated by the Ministry of Home Affairs, Government of India.

(iii) In 1985, FCRA was amended and certain important changes were made:

(a) Funds received by subsequent recipient were brought under the purview of the act.

(b) Definition of political parties was enlarged.

(c) Section 6(1) was amended to ensure that foreign funds were received only after registration, and only through designated bank accounts.

(d) Section 15A was inserted to empower Central Government to inspect and audit books of accounts of organisations.

(e) Section 25A was inserted to ensure that acceptance of foreign funds was prohibited for 3 years after second conviction.

(iv) The inflow of foreign contribution through FCRA has increased from Rs. 24 crores in 1968 to Rs. 4535.23 crores in 2001.

(v) The provisions of FCRA extends to the whole of India including the State of Jammu and Kashmir.

Brief Background

The Foreign Contribution (Regulation) Act, 1976 (FCRA) was passed by the Indian Parliament on 31st March, 1976.

An Act to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain persons and associations, with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organisations as well as individuals working in the important areas of national life may function in a manner consistent with the values of a sovereign democratic republic, and for matters connected therewith or incidental thereto.

The main purpose behind the enactment of FCRA was to curb the use of foreign funds and hospitality for nefarious and anti-national activities or purposes.

The need for having such regulatory law was felt in the late sixties when foreign agencies including important Western Agencies were suspected of having links with various trade unions, student bodies, youth organisations, political organisations etc.

Finally the Foreign Contribution (Regulation) Bill, 1973 was introduced in Rajya Sabha on 24.12.1973. This bill was forwarded to the joint committee of the Parliament in 19.02.1974.

Amendments in year 1985 - In 1985, the FCRA was amended to remove some inadequacies and practical difficulties in administration of the Act. For instance the fund received by the subsequent recipient were also brought within the purview of the Act. Provisions were also made for prior permission, audit and penal provisions for offence under the Act.

For further details please read the various chapters listed alongside….