Our Bureau

New Delhi, June 24

THE Government may mandate commercial banks to file returns with the Union Home Ministry on all foreign contributions flowing into the accounts held by NGOs and other associations.

The main objective behind such an exercise is to ensure better monitoring of receipt, utilisation, and accounting for foreign contributions by NGOs and associations, a senior Home Ministry official told Business Line.

The official pointed out that the Foreign Contribution (Regulation) Act 1976 (FCRA) is silent on the role of banks and that the Government may give them this role through a proposed Bill, which is now before the Group of Ministers.

The FCRA, which has had its share of implementation problems, is an allied legislation of the Foreign Exchange Regulation Act 1974 (FERA).

The Government has already replaced FERA with the Foreign Exchange Management Act (FEMA).

Tax experts are now making a case for repealing the FCRA, stating that the law has become outdated.

Currently, some 30,000 associations are registered under FCRA with the Union Home Ministry, which administers the law.

Home Ministry officials said that the foreign funds received annually by these associations stood at more than Rs 5,000 crore. (Recipients in Delhi and Chennai alone receive about Rs 1,000 crore each every year.)

Through the latest Bill, the Government also intends to modify the current stipulation that restricts an association registered under the FCRA to receive and utilise foreign funds only through one bank account.

"While the NGOs, associations and others who come under the FCRA would have to receive all foreign funds in only one account, they may be allowed to utilise these funds from more than one account," a senior Home Ministry official said.

(This article was published in the Business Line print edition dated June 25, 2005)
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