The Ministry of Home Affairs (MHA) on May 18 extended the deadline for non-government organisations (NGOs) to activate accounts with the State Bank of India’s (SBI) main branch in Delhi (NDMB), a compulsory requirement to receive foreign funds, from March 31 to June 30.
However, 10 NGOs petitioned the Delhi High Court the same day (May 18), seeking a longer extension of six months and seeking the court’s intervention in operationalising their foreign contribution accounts.
The Ministry granted the extension, a day before the petition is to be heard by the court on Thursday.
The 10 NGOs are part of a group of around 490 NGOs that had made a representation to the Ministry seeking an extension as their funds were blocked due to various administrative lapses on the part of the bank and the Ministry.
The SBI, in a press release on May 17, said that “out of the total 22,598 active FCRA [Foreign Contribution Regulation Act] associations, 17,611 entities (NGOs and Associations) approached SBI for opening of FCRA accounts.”
Bank’s claim
The bank claimed that it had opened accounts of 78% of the applicants. “The rest of the accounts shall also be initiated once their pending documentation formalities are completed,” it said.
An NGO functionary, however, said that even though documents were submitted to the bank much before March 31, the accounts could not be operated as a form sent by the SBI making the NGO eligible to receive foreign funds was yet to be authorised by the FCRA division of the Ministry.
According to the amended provisions of the FCRA enacted in September 2020, NGOs were asked to open accounts with the NDMB by March 31, failing which they will not be able to receive any fresh funds.
At least five NGOs moved the Delhi and Gauhati High Courts, arguing that even though they had applied to open FCRA accounts at the bank before March 31, administrative delays on the part of the SBI and the Ministry severely restricted their activities, including providing COVID-19 related relief and paying urgent salaries of staff.
High Court directive
Last week, the Delhi High Court asked the MHA to consider if the deadline can be extended in view of the pandemic.
The Ministry issued an order on May 18, where it said that “keeping in view the exigencies arising out of the COVID-19 situation and to ensure smooth transition to the amended FCRA regime” the Central government, under section 50 of the FCRA, 2010 was making an amendment to allow NGOs to open an account with the SBI up to June 30 or earlier. “After that date, they shall not be eligible to receive foreign contribution in any other account other than the FCRA account opened in the NDMB,” the order said.
Registration relief
The MHA has also given a relief up to September 30 to the NGOs whose registration was expiring between September 29, 2020-May 31,2021. The NGOs had to apply for renewal of certificates or registration by May 31, which has now been extended to September 30, the Ministry said in an order.
The FCRA, first enacted in 1976, was amended in year 2010, when a slew of new measures were taken by the Ministry to regulate foreign donations. It was again amended in September last. The latest amendment to the Act inserted a new provision that makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the NDMB and the accounts were to be opened by March 31. Any other bank account can be linked to the main account but all foreign donations should be received in the SBI account.
Aadhaar mandatory
The Act also made Aadhar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO and capped the administrative expenses at 20% of the total foreign funds received. Earlier, the upper limit was 50%. The amendment also barred sub-granting by NGOs to smaller NGOs who work at the grass roots.
Registered NGOs can receive foreign contribution for five purposes -- social, educational, religious, economic and cultural.
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