The changes will allow the Home Ministry monitor fund usage by NGOs in real-time.
Highlights
- Rules of Foreign Contribution Regulation Act are being changed
- Change was necessary as some NGOs opened accounts in cooperative banks
- Transactions in small and cooperative banks are opaque, say officials
The Home Ministry is changing the rules that govern foreign contribution received by non-governmental organisations, under which, they will now have to maintain their contributory accounts in banks that offer core banking, sources said.
The changes will allow the Home Ministry monitor usage of funds received NGOs on a real-time basis.
"Rules of Foreign Contribution Act (FCRA) are being changed," a senior official Ministry of Home Affairs said.
"The change in the rules became necessary after several NGOs opened accounts in cooperative banks and smaller banks which do not have core banking. "It makes their transactions opaque. Besides, it doesn't allow us to monitor their expenditure," said a senior official.
The ministry has taken action against several NGOs for allegedly misusing foreign contributions and now it wants to watch their income and expenditure on a real-time basis.
Last year, the Home Ministry took a series of actions against various non-profits - cancelling the registration of more than 10,000 of them, including two run by social activist Teesta Setalvad and Greenpeace. The Ford Foundation, too, faced scrutiny over alleged irregularities.
The Ministry will also change the rules which will bar NGOs from using the "prior permission route" to receive foreign funding more than once.
Several NGOs do not register themselves under the Foreign Contribution Regulation Act but seek permission from the Home Ministry to receive funds.
Registrations of fund transfer under the Foreign Contribution Regulation Act impose certain liabilities on the NGOs - for instance regular filing of accounts with the government.
"We are streamlining the process and no NGO will be permitted to receive funds under prior permission category more than once. They will necessarily have to register under the FCRA if they want to receive foreign funds more than once," a senior officer said.