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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Contribution Regulation

Kavya Foundation's FCRA certificate has been suspended. It holds foreign contribution already received in its bank account. Which statement is correct for the suspension period?

During suspension the holder cannot receive foreign contribution unless the Central Government allows it on application, and it may use funds already in its custody only in the prescribed manner with the Government's prior approval. Free use or free receipt is not permitted.

  1. AIt may use the foreign contribution in its custody freely for its usual activities
  2. BIt must not receive any foreign contribution, though the Central Government may allow receipt on application, and it may use existing funds only in the prescribed manner with prior approvalCorrect
  3. CIt must transfer the entire balance immediately to another registered person
  4. DIt may receive new foreign contribution freely but cannot spend existing funds

Explanation

During suspension the person cannot receive foreign contribution, subject to a proviso allowing the Government to permit receipt on application. Existing funds can be utilised only in the prescribed manner with prior approval of the Central Government. Free use is wrong, and transfer to another person is prohibited under section 7.

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