Foreign Contribution (Regulation) Amendment Act 2020

Also called: FCRA Amendment 2020 · Topic: Civil Society, Pressure Groups, NGOs and Self-help Groups · NCERT: Beyond NCERT

Meaning

The Foreign Contribution (Regulation) Amendment Act 2020 is a law passed by Parliament that changed the FCRA 2010. It banned NGOs from passing foreign money on to any other person. It cut the share of foreign money that can go on running costs from 50% to 20%. It made every NGO receive foreign money only in an "FCRA account" at the SBI New Delhi Main Branch. It also required the Aadhaar of all office-bearers [1].

It matters because it decides how much foreign money reaches Indian civil society, and how. In Noel Harper v. Union of India (2022), the Supreme Court upheld it and said there is no fundamental right to receive foreign contributions.

Explanation

Background: what the FCRA regulates

• Foreign contribution: a gift of money, goods or securities from a foreign source. A foreign source can be a foreign government, company, trust or citizen.
• FCRA 2010 is the main law. It replaced FCRA 1976 and came into force in May 2011.
• The Ministry of Home Affairs (MHA) runs it, not the Finance Ministry.
• An NGO (a voluntary group working for social causes, not run by the government) can take foreign money in two ways:
• FCRA registration: valid for five years and renewable. It covers all the NGO's approved purposes.
• Prior permission: a one-time approval for a fixed amount from a named donor for one project.

How the 2020 Bill passed

• Introduced in the Lok Sabha on 20 September 2020 [1].
• Passed by the Lok Sabha on 21 September 2020 [1].
• Passed by the Rajya Sabha on 23 September 2020 [1].

The main changes

• No sub-granting (s.7):
• Sub-granting means an NGO that gets foreign money passes part of it to another NGO.
• Before 2020, a registered NGO could pass funds to another registered NGO.

• Now foreign money cannot be transferred to any other person [1].

• Cap on administrative expenses (s.8):

• Administrative expenses are running costs, such as salaries, rent and audits.
• The cap was cut from 50% to 20%.

• So at least 80% must go to the purpose for which the money was given [1][5].

• One bank for receiving money (s.17):

• Foreign money must first arrive in an "FCRA account" at the SBI New Delhi Main Branch [1][5].

• The NGO may open a second account in any scheduled bank to keep and spend the money [1][5].

• Identity proof (s.12A):

• All office-bearers, directors and key functionaries must give their Aadhaar.

• Foreigners give a passport or OCI card [1].

• Wider barred list (s.3): "public servant", as defined in Section 21 of the Indian Penal Code, was added to the people who can never take foreign money [1].

Stronger government powers

• Suspension (s.13): the government could suspend a registration for 180 days. It can now extend this by up to 180 more days, so 360 days in total [1].
• Surrender (s.14A): an NGO can now give up its certificate voluntarily, with government permission [1].
• Inquiry before renewal: before renewing a registration, the government may inquire whether the NGO is genuine and has not misused funds [1].

In the Constitution and practice

• Constitutional base:
• Art. 19(1)(c) protects the freedom to form associations.

• Art. 19(4) allows reasonable restrictions on this freedom in the interest of the sovereignty and integrity of India, public order or morality.

• Where the law sits:

• FCRA 1976 was passed during the Emergency (1975–77), out of fear that foreign money could shape Indian politics, elections and the media.
• The 1984 amendment made registration compulsory.

• FCRA 2010 is the present law. The 2020 Act amended it.

• People and groups who can never take foreign money:

• Section 3: election candidates, MPs and MLAs, political parties and their office-bearers, judges, government servants, and owners, editors and publishers of news media. Public servants were added in 2020 [1].

• Section 5: organisations of a political nature, as notified by the Central Government.

• Noel Harper v. Union of India (8 April 2022):

• Bench: Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar.
• No fundamental right: receiving foreign money is not part of Art. 19(1)(c) or Art. 19(1)(g) (the freedom to practise any profession or business).
• Strict rules allowed: foreign money can shape national policy, so Parliament may regulate it strictly or even ban it completely.
• Upheld: the sub-grant ban, the 20% cap and the SBI-account rule. The Court said they help the government trace the money.

• s.12A read down: reading down means the Court gives a law a narrower meaning so it stays constitutional. Here, Indian office-bearers may use an Indian passport in place of Aadhaar.

• What happened in practice:

• Amnesty International India (September 2020): its bank accounts were frozen and it stopped working in India.
• MHA data (July 2026): about 20,000 registrations were cancelled in the past decade. About 15,000 more lapsed ("deemed ceased").

• 2024-25: about 16,200 active associations received about ₹22,963 crore in foreign money.

• Later changes:

• FCRA Amendment Rules, 1 July 2022: money from relatives abroad needs no reporting up to ₹10 lakh a year (earlier ₹1 lakh). Where reporting is needed, the time limit rose from 30 days to three months [4].
• FCRA Amendment Rules, 22 June 2026: NGOs must choose purposes from 105 approved activities. Renewal needs "reasonable activity", meaning at least ₹10 lakh of foreign money used over the previous two financial years [3].
• FC(R) Amendment Bill 2026: introduced on 25 March 2026 and referred to a JPC on 12 August 2026. It is not yet law [2].

Don't confuse with

• FCRA 2010 vs. FCRA Amendment Act 2020: the 2010 Act is the main law, in force from May 2011. The 2020 Act only amended it, adding the sub-grant ban, the 20% cap, the SBI account and Aadhaar.
• FC(R) Amendment Bill 2026: it is not yet law and is with a JPC [2]. It deals with vesting of assets in a Designated Authority, a jail term cut from 5 years to 1 year and the Centre's prior approval for investigations [2]. None of these were part of the 2020 Act.
• Finance Act 2016 and 2018 amendments: these were retrospective changes to the meaning of "foreign source" for Indian companies with foreign shareholding. They let political parties keep donations already taken from such companies. They are not part of the 2020 Act.
• Section 3 vs. Section 5: s.3 bars named persons, such as candidates, judges, editors and public servants. s.5 bars organisations of a political nature, as notified by the Centre.

Prelims Hooks

• 2020 Act: administrative expenses cut from 50% to 20% (s.8), sub-granting banned (s.7), receiving account only at the SBI New Delhi Main Branch (s.17) and suspension of up to 360 days (s.13) [1].
• Ministry: the FCRA is run by the MHA, not the Finance Ministry. Registration is valid for five years.
• "Public servant" (as defined in IPC s.21) was added to the Section 3 barred list in 2020 [1].
• Noel Harper v. Union of India (2022): there is no fundamental right to receive foreign contributions. An Indian passport may be used in place of Aadhaar.
• Timeline of the Bill: introduced in the Lok Sabha on 20 September 2020, passed by the Lok Sabha on 21 September and by the Rajya Sabha on 23 September 2020 [1].
• Trap: the 2020 Act did not cut the jail term or create a Designated Authority. Those are in the 2026 Bill, which is not yet law [2].

Mains Points

• State security vs. freedom of association:
• Government's view: the Act protects sovereignty and transparency, in line with FATF Recommendation 8. (FATF is a global body against money laundering and terror financing. Recommendation 8 asks countries to stop non-profits being misused.) Noel Harper (2022) accepted this view.

• Critics' view: Art. 19(4) allows only reasonable restrictions. They point to a chilling effect: NGOs avoid advocacy and dissent because they fear losing their licence. UN Special Rapporteurs have said the law is used to silence human-rights groups.

• Harm to grassroots civil society:

• The sub-grant ban cut off the main way foreign money reached small grassroots NGOs and SHG-support groups.
• The 20% cap and the SBI-only account raise running costs, such as staff and audit costs.

• Together, these shrink the space for advocacy and watchdog work by pressure groups.

• Reform ideas:

• a time-bound renewal process
• a hearing before renewal is refused, and an appeal against refusal (today the Act allows neither [2])
• an independent appellate tribunal
• checks matched to the level of risk, as FATF advises, instead of the same rules for every NGO

Related concepts

• Foreign Contribution (Regulation) Act 2010
• Noel Harper case

Read more

• Regulating foreign funding: the FCRA regime