• Does the new bill take into account current realities?

Some definitions are obsolete. For example, the 1976 Act included any company with majority shareholding by foreigners in the definition of “foreign source”. Today, this would imply that organisations receiving donations from companies such as Infosys Technologies and ICICI Bank would require FCRA registration.

• Are there major loopholes in the law?

It is easy to bypass the provisions of this act (and the new bill). Consultant fees, exports etc. are not covered by FCRA, and this provides a loophole for channeling funds without conforming to the requirements of this act.

• Are there any new requirements proposed for registration?

Under the earlier act, organisations had a lifetime registration. The proposed bill requires registration to be renewed every five years. The approving authority must be satisfied that the applicant “has not indulged in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another”. Also, that the organisation is “not likely to use the foreign contribution for personal gains or divert it for undesirable purposes”; that is, the approving officer is required to predict future behaviour of the organisation.

• Does the new bill specify further restrictions?

The bill places a cap of 50 per cent of FCRA funds for administrative expenses. It could be argued that this is an issue to be settled between the donor and the user, with the government only ensuring that the use be not against national interest. The bill prohibits the use of FCRA funds for “speculative business”, a term that is not defined. It is not clear whether investment in mutual funds or even government securities (which carry market risk) would be considered as speculative.

... contd.