What is FCRA and how does it work?


FCRA, basically known as FCRA Act 2010, is in the news because recently the Ministry of Home Affairs has declined the review of the FCRA Licence renewal application of a popular NGO known as Missionaries of Charity, which was founded by Mother Teresa, on the grounds that this organization was not adhering with some of the eligibilities criteria and also the Home Ministry has reviewed certain adverse inputs against the functioning of this NGO.

Initially, it was misreported that the government has frozen the bank accounts of this NGO but later it was clarified that it was not the Government that froze the account but the NGO itself requested the freezing of its bank accounts following the rejection of its license renewal application.

The incident brought the topic of FCRA in the news and for the last several years the NGOs have been questioning the manner in which the Indian Government blocks international donations to their organizations.

In this article, we learn – what is FCRA, its meaning, background, full form, its functioning, provisions, and recent controversies related to it. The topic is also important in the view of UPSC Prelims and Mains examinations.

What is FCRA?

FCRA or Foreign Contribution (Regulation) Act, 2010 is an act of the Indian parliament that aims to regulate the acceptance and utilization of foreign contributions or foreign hospitality by certain individuals, associations, or companies. The act prohibits acceptance and utilization of foreign contributions or foreign hospitality for any activities detrimental to the national interest.

FCRA Full formForeign Contribution (Regulation) Act
Introduced in2010
Commenced1 May 2011
Total chapters9
Ministry concernedMinistry of Home Affairs, Govt. of India
Official DocumentFCRA – 2010.pdf


The act was first introduced in 1976 when the then Government feared that foreign funding could be misused to create internal security challenges for the country.

During the Cold War era, there was sufficient reason to believe that a few organizations and NGOs operating in India could be funded by hostile interests in order to achieve their Geopolitical objectives as well as their religious objectives. Which in turn could pose a threat to India’s economic security as well as to India’s national security.

It was also feared that foreign funding of certain organizations could be misused to damage the sovereignty of India by creating communal and societal divides.

On the above grounds, the FCRA 1976 was enacted to regulate the foreign funding received by organizations and NGOs operating in India however several deficiencies were found in the act, and hence old act (FCRA 1976) was repealed.

Download Official document: The Foreign Contribution (Regulation) Act, 1976.pdf

Functioning of FCRA Act 2010

After repealing FCRA 1976 the new FCRA was enacted in 2010. Currently, FCRA 2010 is the act that is in operation in India.

The FCRA works by controlling the flow of international donations within the boundaries of the nation. As per FCRA, it is mandatory for all associations, groups, or NGOs to register under the act by submitting required applications and documents to the Ministry of Home Affairs.

The act mandates all organizations to clearly spell out all their activities in the country along with the purpose and intent behind receiving international funding.

If all the norms are made, MHA grants FCRA registration which will be initially valid for a period of five years, and along with the registration, organizations will also have to obtain a license to be eligible for receiving international funds which also have to be renewed periodically by the Home Ministry.

The continued registration of the organization and renewal of its license depends on the ability of the organization to comply with norms and guidelines that have been let down by the Ministry of Home Affairs from time to time.

For these norms, the organization has been required to maintain accounting and auditing standards prescribed by the government and when required the data of the same will have to be submitted to the MOH.

FCRA also works by keeping close sights on these, under which organizations will have to file for an annual return just like filling IT return which helps the government in scrutinizing the utilization of the funds.

Objectives of FCRA

The FCRA has three main objectives that aim to –

  • prohibit acceptance of foreign contributions
  • restrict acceptance of foreign hospitality.
  • impose definite restrictions on the utilization of foreign contributions for certain purposes.

Salient features of FCRA

  • The act provides registration facilities to certain organizations or entities that are involved in welfare activities and also provides a “Grant of certificate of registration” to those that comply with FCRA norms.
  • It includes the provision for the cancellation and suspension of registrations of entities / NGOs / organizations if the Home Ministry, after inquiry, believes that the organization is not neutral and or violating the terms and conditions of the certificate or renewal thereof.
  • The Foreign Contribution (Regulations) Act also provides the management of foreign contributions of a person whose certificate has been canceled.
  • The act provides provisions and powers to the central government to grant the registration certificate to the NGOs which have five-year validity.
  • It explains the procedure and avails facility for “Renewal of certificate” within six months before the expiry of the period of the certificate.
  • the act laid down procedures regarding the maintenance of accounts, intimation, audit, and disposal of assets.
  • Under the act, certain provisions were made regarding the disposal of assets created out of foreign contributions.
  • the act gives powers to the central government to inspect, search, launch an inquiry against any irregularity, and seize or confiscate the article currency, or security obtained in contravention of the Act.
  • It also gives the grounds to identify the offenses and prescribes the manner of awarding penalties and punishments, jail up to 5 years, to violators.

Who can accept foreign contributions?

Certain organizations engaged in cultural, social, economic, educational or religious programs, are allowed to accept foreign contributions only if they –

  • Have obtained a “certificate of registration” from the Home Ministry and complied with the FCRA rules and guidelines or
  • Any other entity, group, or organization permitted by the Central government.

Who can’t accept foreign contribution

  • Candidate willing to contest election
  • Correspondent, cartoonist, owner, any member or publisher of a registered newspaper
  • Judge
  • Government servant or employee of any corporation or employee of any other body controlled or owned by the Govt.
  • Member of any Legislature
  • Any political party
  • News agency

New Rules / Amendments Rules 2020

Recently the central government has proposed FCRA Amendments Rules 2020. Under the amended act “THE FOREIGN CONTRIBUTION (REGULATION) AMENDMENT ACT, 2020” the following major changes have been made –

  • Section 12 (1A): Every person who makes an application under sub-section (1) of the FCRA act is required to open ‘‘FCRA Account”.
  • Section 17(1): By inserting this new section 17(1) the act makes it mandatory that every person only receive foreign contributions in an account designated as “FCRA Account” by the bank. It further mandates that such an account should be opened only for the purpose of remittances of foreign contributions in the State Bank of India New Delhi branch or in a bank specified by the Central Government.

Download the official document: The Foreign Contribution (Regulation) Amendment Act, 2020.pdf


Intelligence Bureau (IB) inputs imply that foreign funds were being misused to promote threats to the peace and national security of India. These inputs further witnessed that the money was used to train Naxals. Since, it is a matter of national security, an urgent need to make certain amendments was realized.

As per the law, organizations that are accepting foreign donations will be bound to strictly adhere to the purpose for which they were allowed to function in the country and have to show that they are using international funds only for the stated purpose and on no accounts, their activity poses threats to the countries national security and public interests.

The recent FCRA rules, 2020 have been turned into a strengthening law that allows the government to effectively regulate the international findings of NGOs in the country. So, this act essentially governs and regulates the international donations and funding received by associations, groups, and non-governmental organizations in India.

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