In a bid to maintain transparency, the Ministry of Home Affairs has directed NGOs, businesses etc that receive foreign funding to open bank accounts within a month.
Under the directive, bank accounts are to be opened in one of the 32 designated banks including one foreign bank, Abu Dhabi Commercial Bank.
It additionally asked them to not channel the funds towards hampering national interest.
What does the directive entail?
Under the directive, non-governmental entities that receive foreign-funding are required to open accounts with banks that are registered under India's integrated Public Financial Management System (PFMS).
This is to be completed before 21 January 2018 and details have to be communicated to the ministry.
The idea is to compile account details maintained by these entities through PFMS to "ensure transparency and hassle-free reporting compliance."
What is PFMS?
PFMS operates under the Controller of General Accounts at the finance ministry.
It is an integrated system which maintains databases on agencies receiving funding for implementation projects, banks handling plan funds, state treasuries etc.
It enables the government to track flow of funds to the lowest level of implementation.
The system has purportedly resulted in benefits such as better financial management and greater transparency.
Do you know?
Which are the banks integrated under PFMS?
These banks include: Allahabad Bank, Syndicate Bank, ICICI Bank, State Bank of India, IDBI Bank, Central Bank of India, Abu Dhabi Commercial Bank, HDFC Bank, UCO Bank, and others. However, many banks are reportedly not completely integrated with the PFMS, despite repeated letters and meetings.
Modi government's tightening regulatory grip on NGOs
Since getting elected in 2014, the Narendra Modi government has been tightening the regulatory grip on NGOs.
According to government figures, licenses of 18,868 NGOs were cancelled between 2011-2017 for violating the provisions of the Foreign Contributions Regulations Act (2010) which prohibits entities using foreign-funds against national interest.
The government has also been criticized for using these provisions to suppress dissent from NGOs.