The new Foreign Contribution Regulation Act has come into force under which no political party can receive foreign funds as donation and which will facilitate regulation of foreign contributions and hospitality by individuals and organisations.
The Act, which was passed by both houses of Parliament, is aimed at consolidating the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies.
The new Act, which came into force on May 1, was necessitated in the wake of changed internal security environment and large fund flow and the legislation would prevent "powers" which want to use foreign funds to divide the country on "religious basis".
According to government estimates, there were over 40,000 organisations receiving foreign contribution in the country out of which only 18,000 report the inflow of funds and submit their accounts.
As the bill was notified on May 1, it will ensure that every five years the organisations renew their registration so that the dormant ones can be weeded out.
The banks also have been brought under the ambit of the act and every bank or authorised person in foreign exchange shall report to such authority prescribed amount of foreign remittance and the source and manner in which the foreign remittance was received.
Any organisations receiving funds over Rs10 lakh, the bank will immediately inform the government to enable the agencies to "track" the funds.
As per the act, no foreign contribution shall be accepted by any political candidate for election; member of any legislature, political party or office-bearer thereof and organisation of a political nature as may be specified.
Organisations with fictitious or benami accounts, have indulged in conversions directly or indirectly, created communal tension, supported sedition or have diverted funds earlier would be barred from receiving foreign contributions.
The bill which has replaced the FCRA 1976 was aimed at regulating the acceptance, utilisation and accounting of foreign contributions and acceptance of foreign hospitality by a person or an organisation.
Under the new Act, a person granted prior permission to receive foreign contribution shall utilise it for the purposes for which it has been received, it cannot be used for speculative business; not use more than 50 per cent of its received for administrative purposes.
The NGO and individuals will have to submit their accounts in time failing which action would be taken against them.