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FEMA to tame foreign hand in NGO funding

To prevent ‘dirty’ money from entering the country, the government is likely to seek possible amendments in existing laws to ensure that foreign NGOs do not exercise total control over their affiliated organisations in the country.

Published: 11th November 2012 08:24 AM  |   Last Updated: 11th November 2012 09:25 AM   |  A+A-

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Foreign NGOs will no longer have it easy over fund transfers to their Indian subsidiaries. They have come under the government scanner after ‘suspicious’ money transfers caused alarm bells to ring at the home ministry. To prevent ‘dirty’ money from entering the country, the government is likely to seek possible amendments in existing laws to ensure that foreign NGOs do not exercise total control over their affiliated organisations in the country. Violators will face criminal charges once the proposed amendments are in place, with such funding being made subject to Foreign Exchange Management Act (FERA) regulations. Currently, the much milder Foreign Contribution Regulation Act (FCRA) governs official NGO cash transfers.

FCRA allows the numerous overseas NGOs who have opened their chapters in the country to wield complete administrative control through their representatives. Sources said that the Ministry of Home Affairs has noticed several ‘suspicious’ instances of NGOs registered abroad forming Indian subsidiaries which receive money through the legal route under the Foreign Citizens Registration Act (FCRA ). The ministry has learnt that many Indian NGOs are not fully controlled by the parent organisation either. As per FCRA guidelines, Indian NGOs receiving foreign funds need to be independent from any foreign agency’s control, and should be registered as per the rules of the Indian Societies Act.

“Although any Indian subsidiary of a foreign non profit organisation can appoint Indian directors, the majority share is controlled from abroad. The foreign organisation is the real owner of the NGO, which violates the very spirit of rules envisaged under the FCRA,” ministry sources said.

 

- Sunday Standard



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