Tuesday, 26 December 2017

Is the Bank where you maintain your FCRA Account PFMS Compliant?

Is your Bank PFMS Compliant?
If not, please transfer your FCRA Bank account to one that is PFMS compliant before 21st January 2018 and intimate the change to Ministry of Home Affairs in the online Form FC 6!

MHA's latest directive
If your NGO/NPO is registered under FCRA 2010 or has prior permission to receive funds from a foreign source, please ensure that the bank where you have your FCRA account or FCRA utilization account is compliant with the Public Financial Management Systems (PFMS)! If not, please close your FCRA account with the bank and transfer all the FCRA funds to a bank which is PFMS compliant, before 21st January 2018 and intimate the change to Ministry of Home Affairs in the online Form FC 6 within 15 days of the change.

Earlier this year, the Home Ministry had asked around 9,000 NGOs and other entities to open their accounts in banks having core banking facilities and furnish details for real-time access to security agencies in case of any discrepancy. The Ministry of Home Affairs (MHA) has now issued a directive on 21st December 2017 to open and maintain FCRA accounts only in banks, which are integrated with the Central Government's Public Financial Management System (PFMS) in order to ensure “higher level of transparency” and “hassle-free reporting compliance”.

MHA had been trying to get all banks with FCRA accounts to become PFMS-compliant. However, with only some of them migrating to PFMS, MHA has decided to take a tougher stand in this regard and instead of taking the banks to task for not being PFMS compliant, NGOs/NPOs have been tasked with moving their FCRA accounts to Banks which are PFMS compliant.

Click here to read the full text of MHA’s Notice dated 21st December 2017

Click here to see the list of 32 PFMS compliant banks issued by MHA

What is Public Financial Management System (PFMS)?
The Public Financial Management System (PFMS), earlier known as Central Plan Schemes Monitoring System (CPSMS), is a web-based online software application developed and implemented by the Office of Controller General of Accounts (CGA).

PFMS was initially started during 2009 as a Central Sector Scheme of the Planning Commission with the objective of tracking funds released under all Plan schemes of Government of India, and real time reporting of expenditure at all levels of Programme implementation. Subsequently in the year 2013, the scope was enlarged to cover direct payment to beneficiaries under both Plan and non-Plan Schemes.

The primary objective of PFMS is to facilitate sound Public Financial Management System for the Government of India by establishing an efficient fund flow system as well as a payment cum accounting network. PFMS provides various stakeholders with real time, reliable and meaningful management information system and an effective decision support system, as part of the Digital India initiative of the Government of India.

MHA should Regulate NOT Control
The role of legislation is to regulate and not control. The Act itself is titled ‘Foreign Contribution Regulation Act and it is intended to “regulate the acceptance and utilization of foreign contribution”. However, historically, MHA has consistently tried to control NGOs and their activities and funding for such activities rather than simply regulate compliance within the framework of the statute. In recent history it has mandated requirement of ‘Darpan UID’ without which NGOs would not be able to use any FCRA online service and now it has mandated FCRA Bank accounts can be maintained only with PFMS compliant Banks.

We are not against the principle or the need for “higher level of transparency” among NGOs. In fact we are all for it and would encourage it. But, why is “higher level of transparency” not reciprocated by the government towards NGOs and Civil Society Organisations? In most cases when registration or prior permission is not granted or an existing registration is suspended or revoked, no transparency of high or low level is exercised. Decisions are often taken arbitrarily and no cogent argument is provided to support MHA’s stand.

It is indeed tragic that many within the government system view NGOs and other such civil society organisations as a threat to India’s sovereignty and mainly as entities supported by foreign agencies with a view to destabilize the government or it’s functioning.

Decrease by over fifty percent in foreign funding
In fact, just recently, Union Minister of State for Home Kiren Rijiju informed Parliament that the registrations of 18,868 NGOs have been cancelled between the years 2011 and 2017 for violating the law. Following this action, foreign funding to Indian NGOs has also come down drastically, from Rs 17,773 crore during the financial year 2015-16 to Rs 6,499 crore during the financial year 2016-17.

Rijiju has also stated that the quantum of foreign funding received by NGOs in India in the last three years were: Rs 15,299 crore during financial year 2014-15, Rs 17,773 crore during financial year 2015-16 and Rs 6,499 crore during the financial year 2016-17. This is more than a fifty per cent decrease in foreign funding within a span of just three years.

Currently, just around 10,000 FCRA-registered NGOs are reported to be operating in India. Barely two years ago, statistics indicated four times the numbers! Even assuming that fifty per cent of the over 40,000 FCRA registered associations were defunct, the current statistics still indicate a fifty percent drop in the numbers.

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