NGOs punished heavily while NPAs not so much


A record 10,020 FCRA registrations have been cancelled in 2015 for not filing Annual Returns during 2015 for not filing Annual Returns for the financial years 2009-2010, 2010- 11 and 2011-12. The NGOs and the associations put together raised a maximum of 1452 crores in the year 2014-2015. Now compare these statistics with the NON performing assets (NPAs) of the Banks (PSBs) for the year 2015-16.

The NPAs increased from Rs 2,67,065 crores in 2015 to 4,76,816 in 2016. This is despite RBI’s warnings in January 2014 which came out with “Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders : Framework for Revitalizing Distressed Assets in the Economy,” in which the banks have to start acting as soon as a sign of stress is noticed in a borrower’s action and not wait for it to become an NPA and yet 2 years later, the NPAs have only doubled.

While NGOs and NPAs may not be the right comparison, what is noteworthy is the swiftness with which the govt. acted in the case of NGOs.

Not only did the govt. monitor the NGOs for every single transaction, they also had a robust follow up mechanism in place that allowed them to act with an iron fist.

fcra-cancelled

ngo-funds

So how is the govt. able to act so swiftly against the NGO’s?

  • The Government monitors the receipt and utilisations of foreign contribution received by associations as per the provisions contained in FCRA, 2010.
  • As and when complaints/ inputs are received against an association about alleged misutilization/ misappropriation or receipt of foreign contribution without prior permission/ registration under the Act, their accounts are scrutinized/ audited.
  • In case of misutilization of funds, the cases are referred to CBI or State Police.
  • In other cases, the offence is compounded by levying of penalty.
  • The registration process shall further be streamlined after the proposed amendment in Foreign Contribution (Regulation) Rules, 2011.

While the govt. claims that they are acting in accordance with the FCRA provisions, the UN Special Rapporteur on Freedom of Association and Assembly in his local analysis of FCRA 2010 has submitted a report arguing that FCRA is not in conformity with international law, principles and standards as access to resources including the foreign funding is a fundamental part of the right to freedom of association under the international laws, standards and principles.

npa

While the NGOs are blacklisted when found violating the FCRA rules, the names of borrowers who owe the banks more than 500 crores are protected. Why?

The NGOs are blacklisted for not filing their taxes while the borrowers loans are restructured and/or written off. Why?

While the NGOs are scrutinized for every single rupee they raise and rightly so, the banks are allowed to get away with lakhs of crores of money. Why?

While more than half of the NGOs with FCRA registrations have been cancelled, the wilful defaulters conviction rate has been an abysmal 1.14%. Why?

Is it because defaulters

On a lighter note, while we may never know why the govt. cracking down on NGOs so hard, the below excerpt from the Financial Stability Report may give us some clues – social activism is highlighted as one of the major reasons for the NPAs in the power sector.

financialstability

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