The Union law ministry and the State Bank of India —which receives all foreign donations—have supported the objectives of the proposed amendments to the Foreign Contribution (Regulation) Act, but the latter said the legislation poses some challenges from the banker’s perspective.
“It does not specify whether the account to be frozen continues to operate, who operates it, whether credits and permitted debits can continue, and who authorises payments,” the SBI team said. The bank’s presentation highlighted “areas of concern” from the perspective of “donors, beneficiaries, and the common man. It said automatic cessation might lead to small or rural associations losing control of funds immediately. In whole asset-vesting or for vesting assets created partially from domestic funds, the SBI said that the onus of establishing the distinct portion lies with the association and maintained that ongoing programmes might be affected during vesting period.
The introduction of Chapter three in the bill, which allows a designated authority to not only take control of the assets of an organisation that ceases to have an FCRA licence, but also empowers to sell of transfer such assets to the government. “The proposed introduction of a new chapter III A seeks to provide a clear, time bound, and comprehensive statutory framework for the vesting, management, utilisation and disposal of foreign contribution and assets created therefrom in cases of cancellation, surrender, or cessation of registration under the act. The Opposition parties have raised serious objections to this chapter, which replaces Section 15 in the current law.
At present, while the act provides for vesting of assets, it does not specify the nature, duration, or finality of such vesting, resulting in an open-ended custodial arrangement and administrative difficulties in managing and safeguarding assets,” the law ministry said.
Defending the bill amid stiff objections by the Opposition parties, the law ministry said while Section 15 of the current law allowed vesting of assets, “but the absence of a comprehensive framework for supervision, management and disposal of such assets has led to administrative uncertainty and operational issues.
“Multiplicity of investigations, inconsistency in penalties, absence of timelines for utilization, lack of express provisions for cessation of registration and ambiguity regarding treatment of assets during suspension had resulted in implementation challenges,” it said.
