Friday, 23 February 2018

More Banks join the PFMS system


Readers may recollect our Blog post of 26th December 2017 wherein we had said that if your NGO/NPO receives or expects to receive government grants or 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 integrated with the Public Financial Management Systems (PFMS)! At that point in time just 32 Banks were PFMS compliant. The number has now shot up to 53 and will possibly keep growing.



The list of these 53 Banks can be verified on the following link on the Ministry of Home Affairs’ website: https://fcraonline.nic.in/fc_bank_list.aspx

List of banks integrated with PFMS
Sr. No.
Bank Name
1
ABU DHABI COMMERCIAL BANK
2
ALLAHABAD BANK
3
ALLAHABAD UP GRAMIN BANK
4
ANDHRA BANK
5
ANDHRA PRAGATHI GRAMEENA BANK
6
AXIS BANK
7
BANK OF BARODA
8
BANK OF INDIA
9
BANK OF MAHARASHTRA
10
BASSEIN CATHOLIC CO-OP.BANK LTD.
11
BOMBAY MERCANTILE CO-OP.BANK LTD.
12
CANARA BANK
13
CATHOLIC SYRIAN BANK LTD.
14
CENTRAL BANK OF INDIA
15
CITIBANK
16
CITY UNION BANK LTD
17
CORPORATION BANK
18
DCB BANK LIMITED
19
DENA BANK
20
DEUTSCHE BANK
21
DHANLAXMI BANK LTD
22
HDFC BANK LTD
23
HSBC
24
ICICI BANK LTD
25
IDBI BANK LTD
26
INDIAN BANK
27
INDIAN OVERSEAS BANK
28
INDUSIND BANK LIMITED
29
KARNATAKA BANK
30
KARUR VYSYA BANK
31
KOTAK MAHINDRA BANK
32
MADHYA BIHAR GRAMIN BANK
33
MANIPUR STATE CO-OP.BANK LTD.
34
NEW INDIA CO-OPERATIVE BANK LTD
35
ORIENTAL BANK OF COMMERCE
36
PUNJAB AND SIND BANK
37
PUNJAB NATIONAL BANK
38
SOUTH INDIAN BANK
39
STANDARD CHARTERED BANK
40
STATE BANK OF INDIA
41
SYNDICATE BANK
42
TAMILNAD MERCANTILE BANK LTD
43
THE COSMOS CO-OPERATIVE BANK LTD.
44
THE FEDERAL BANK LTD
45
THE JAMMU AND KASHMIR BANK LTD
46
THE RATNAKAR BANK LTD
47
THE SARASWAT CO-OPERATIVE BANK LTD
48
THE SHAMRAO VITHAL CO-OPERATIVE BANK LIMITED
49
UCO BANK
50
UNION BANK OF INDIA
51
UNITED BANK OF INDIA
52
VIJAYA BANK
53
YES BANK LTD



Monday, 19 February 2018

Senior Officer of Swiss Development Cooperation Blacklisted & Unceremonious Deported!


Just at the time when Prime Minister Mr. Narendra Modi in his speech at Davos was exhorting the world to take forward globalization in letter and spirit, the authorities in his home state of Gujarat whose model he keeps on boasting about, were busy deporting a former Swiss Diplomat without any rhyme or reason.


Ignoring his nearly five-decade-long association with India, both as a diplomat and as a senior official of the Swiss Development Cooperation (SDC), which is part of Switzerland’s Ministry of Foreign Affairs, the Government of India unceremoniously deported seventy-five years old Mr. Kurt Vogele when he landed in Ahmedabad on January 22, 2018.

Mr. Kurt Vogele’s unceremonious deportation came just days after India denied visas to a team of Australian journalists for having written a story on business tycoon Gautam Adani who is allegedly very close to Prime Minister, Mr. Narendra Modi.

A large number of Indian social activists, who have been friends of Vögele and are well connected internationally, have started a campaign seeking an explanation from the Indian authorities for their impulsive and arbitrary action.


Media reports suggest that the Vögele was probably denied an entry on the grounds that SDC gave INR Three hundred million as foreign funding to the Gujarat-based Dalit rights organization Navsarjan Trust whose FCRA license was not renewed on December 15, 2016. Navsarjan had reportedly attracted the adverse notice of the Intelligence Bureau and Home Ministry for alleged, “Undesirable activities aimed to affect prejudicially harmony between religious, racial, social, linguistic, regional groups, castes and communities”. However, sources say that Vögele was an invitee of Janvikas and Centre for Social Justice and Navsarjan had nothing to do with it. Perhaps they 'added two and two' on account of Sethi also being associated with Navsarjan.

In a detailed letter dated January 29, 2018, addressed to Sibi George, the Indian Ambassador in Switzerland, Vogele wrote that he had “an awfully bad experience” as his visa, which he had obtained by end of December 2017 in Berne, was rejected by the immigration officials. Stating that no specific reason was given for denial of entry, he wrote: “I was just told that I had no right to enter India, that I was blacklisted and that I had to return to Switzerland immediately.”

Vogele said he found this experience “humiliating” and “a result of an arbitrary decision, not worthy of a country I have learned to respect and appreciate”. He had last visited India in January 2017 on an invitation of the Malabar Union in Kerala.

Vogele said he insisted that he had a valid visa and his requests that he be informed of the reasons for his deportation were all “totally ignored”. Nor was he allowed to phone his friends who were waiting for him at the airport.

Vogele was visiting India on an invitation from Gagan Sethi, the founder of Janvikas and several other organisations working in areas of human and institutional development, access to legal justice, women empowerment, conflict management, and minority and Dalit rights. Sethi, it is learnt, had also gone to receive Vogele and the latter had urged the immigration authorities to give him an opportunity to speak to him.

In his letter, Vogele said that his arguments, “especially my asking for the reasons for this decision was not considered at all”. He added how his “passport also was not given back” to him, and was returned only after he landed in Geneva. The senior diplomat has urged the Indian ambassador in Switzerland to let him and Imfeld know the reasons for such unilateral behaviour by a country he cherish for its democratic institutions.

All of us in the CSO/NGO sector are very alarmed by the unceremonious manner in which the immigration officials at the Ahmedabad airport denied entry to Kurt Vogele. What is even more worrying is, there is a studied silence on the part of Government of India officials over the reason behind what appears to be a very impulsive decision.

What also upsets us is the way he was treated at the Ahmedabad airport. Not only was he told to return to Switzerland immediately, but, his pleas for wanting to phone his friends waiting for him outside, as also his insistence that he should be told the reasons for his deportation, were summarily ignored. He felt “wronged, saddened and violated”, to quote him from his letter of protest to the Indian ambassador in Switzerland.

That a person of his Mr Vogele’s stature, who is an avid India friend since 1960s, had to face such humiliation is difficult to believe or accept. Are we a sovereign democratic republic or a banana republic?

Instrumental in providing major assistance during the devastating earthquake in Kutch  in 2001, Kurt had partnered with the Institute of Rural Management, Anand (IRMA), NABARD, MILMA (Malabar Union), Calicut, and the Kerala Institute for Local Administration (Thrissur).

We feel that blacklisting a good friend of India, that too when the Prime Minister is seeking to remove the barriers of protectionism, is not ‘good policy’; it will only harm India’s prestige abroad, especially among long-time ‘friends of India’. While the Union home ministry is said to have sought a report from the Bureau of Immigration, the fact is, all decisions to deny entry to foreigners emanate from those handling things in New Delhi, and individual immigration officers are simply not in a position to provide any reason.

The Government of India owes an apology to Mr. Vogele.


Sunday, 11 February 2018

CAP’s Workshop on Good Governance & Effective Management of NPOs

Day & Date: Tuesday, 27th February 2018 
Time: 10.00 a.m. – 3.30 p.m.  
Venue: YMCA International House, Mumbai Central, Behind Maratha Mandir Cinema.   
Key Workshop Learning & Take-away:  
• Good Governance Best Practice 
• Risk Management 
• Performance Management 
• Value Protection 
• Value Creation 
• Change Management  


ABOUT THE WORKSHOP 
Boards and management of NGOs and other not for profit organisations need to be able to constantly respond to a number of questions:  
  • What is good governance and what are the necessary attributes for boards of the future? Structures, behaviors and competencies need to be fit for practice and understanding of what successful organisations are doing.  
  • Why we are here and where are we going to? This requires clear understanding of the mandate, mission, vision and values of the organisation.  
  • How do we get there? This requires a coherent strategy and operational plan to deliver against objectives.  
  • What might prevent us from getting there? This is the risk management piece. Risk management is not about being risk averse but about understanding the uncertainties that can prevent the organisation from achieving its goals.  
  • How do we know we are getting there? This is the performance measurement piece, tying into effective processes and delivering impact.  
  • How do we remain nimble? This requires recognition that change is constant and managing change needs to be understood at all levels   

Who should attend & why? 
Trustees of trusts, members of the governing body of societies, Directors on the Board of Non-profit companies, CEOs, COOs and all key senior executives would benefit from the learning at this workshop.  

Continuous learning and improvement is something that all Boards and Management need to consider. The organisations that are succeeding have recognized this and know that they need to be nimble and able to change and adapt. How do you stay best in class, in governance, risk management and performance measurement?   

This Workshop will discuss how to implement risk management that focuses on both value protection and value creation, linking strategy to risk. It will also discuss aspects of measuring performance and impact and will consider useful research on change management and strategy facing NGOs.   

We will discuss what leads to successful change, lessons learned, how to go about it and how to recognise when change is needed. Most change efforts do not deliver up to expectations. What is the difference between successful transformational change and simply tweaking? Boards and senior management need to ensure that they can lead and shape change efforts big and small.  

ABOUT THE SPEAKER 


Pesh Framjee is the Partner leading the International Not For Profit Group at Crowe Horwath International. A role he previously carried out at Deloitte and Arthur Andersen. Pesh is a Chartered Accountant working in the UK with Crowe Clark Whitehill which is has been recognized by independent surveys as the leading provider of audit and related services to charities. Crowe Horwath International is ranked number 8 among global accounting firms and associations, with over 760 offices throughout the world, has specialist teams working with Not for Profit Organisations and those that fund them.   

Pesh has been working in UK for over 35 years and writes and lectures internationally on matters facing NGOs and Civil Society. Pesh works with NGOs around the world and therefore understands the different contexts - he is an Indian citizen who is regularly in India and he has an understanding of the opportunities and challenges facing Indian NGOs.  

He is an acknowledged expert in the field and a thought leader in areas of financial management, financial reporting, effective governance, strategy and risk management and performance measurement.   

Pesh is past board member of the Institute of Risk Management, Special Advisor to the Charity Finance Group (A UK umbrella body with more than 1,350 charities in membership, managing over £21.1 billion). He has been a member for 22 year of the SORP Committee that produces the accounting and narrative reporting guidelines for UK charities and is also a member of the working group considering the development of an International Financial Reporting Standard for Not for Profit Entities   

FEES: Rs. 1,000/- per participant (Fee includes cost of vegetarian/non-vegetarian buffet lunch, tea and workshop material.  

Fees must be paid in advance and once paid, it will not be refunded 

MODES OF PAYMENT 
Cheque  
You may send a cheque drawn in favour of Centre for Advancement of Philanthropy to our registered office at the following address: Centre for Advancement of Philanthropy 4th Floor, Mulla House  Behind Flora Fountain, Fort, Mumbai - 400 001 
    
Via bank transfer (NEFT), using the following details: 
Bank Name: Central Bank of India  
Bank Address: Central Bank of India, Mumbai Main Office Branch, Mumbai 400 023 
Name Of Account Holder: Centre for Advancement of Philanthropy 
Account Number: 1721311396 
IFSC: CBIN0280621  
If you opt for payment by bank transfer, kindly notify us at admin@capindia.in or call us on (022) 22846534.      

_________________________________________                                

REGISTRATION FORM
(Details to send in to us)  

Name/s of Participant/s :     
Position / Title :  
Organization/Institution :  Contact Address :   
City & Pin, 
State :  
Tel. No.  with STD code :  
Fax No.  with STD code :  
E-Mail :  Fees & Mode of payment         

Monday, 5 February 2018

Impact is not limited to big philanthropy

Today the term “impact” is used rather loosely by both donor and recipient organisations. More often than not the term is used in proposals and reports just to let the term “impact” make an impact on the reader. 
Of course, as we all know, having social or developmental impact is the result of a deliberate set of activities with clear and definite goals around this definition. 
It’s critical to clearly differentiate between the broad term ‘impact’ and a more deliberate definition of social impact. 
Impact on its own implies an influence or effect on virtually anything, given its context. 
Social or Developmental impact however, is grounded in the effect it has on a pressing social challenge.
We are pleased to carry on our Blog, key insights from an article titled, “Impact is not limited to big philanthropy” written by CAP’s Board Member, Mrs. Rati F Forbes and which was originally published on India Development Review (IDR). 
One may read her original by clicking on the following link:


Rati’s article is a reflection of her leadership in the field of philanthropy. She validates the maxim that leadership is not about a title or a designation. It’s not about her being a Director at the Forbes Marshall Group. It is about her full-time devotion to the 'Social Initiatives' of her group companies and giving the corporate foundation which she heads a clear and strategic direction. If leadership is about impact, influence and inspiration, Rati has demonstrates by example how impact involves getting results and how she influences and inspires peers by spreading her passion for philanthropy.

When Rati thinks back to the beginning of her giving journey, she states: “I think about how I really didn’t know where to start, or how to best embark on it. I read about and researched causes that interested me and those that seemed the most essential to give to; I spoke to founders of nonprofit organisations and accompanied them on site visits; and I tried to meet others working in this area by attending as many seminars and conferences as I could.”

Part of her research involved reading articles and books written about Indian and foreign philanthropists who had been recognized and feted for their giving. And, then she comes out with an admission which many of us would resonate with: “Truth to tell, instead of being inspired by these stories of large-scale individual giving, I was scared and overwhelmed. The more I read, the more it seemed as if only giving away crores of rupees of personal wealth could lead to significant impact. It also seemed as if the most vital causes to give to were enormous ones such as the eradication of a disease, or large-scale education efforts.”

Rati speaks about lack of supporting infrastructure for smaller givers but on a more positive note she is very clear and emphatic in stating that the development ecosystem needs a variety of givers and, very possibly, the combined effort of a thoughtful group of ‘smaller givers’—people giving INR 5 to 25 lakh per year — can have the same impact as one larger donor.

Based on her giving journey, Rati shares the following wisdom and insight with readers at IDR.
  • Identify a cause that resonates with you. Smaller amounts, when given smartly, can make a larger impact. That’s why it’s best that first-time philanthropists partner with a nonprofit.
  • Build a long-term association with a nonprofit. Once you choose a nonprofit, invest in building a partnership. It is important that you embark on this journey together, so take the time to have conversations and understand the real needs of the organisation you are getting associated with.
  • Think about sustainability. Every contribution can’t have an element of sustainability, but many can.
  • Collaborate. Impact can be stronger and can have greater reach when giving is done in a collaborative mode.

We once again that India Development Review (IDR) for permitting us to carry highlights of Rati’s article and we also remind readers to read the full text of her original article by clicking on the following link: 

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Friday, 2 February 2018

Implications of Finance Bill 2018 on Charities

Finance Bill 2018 has given no reason to charitable organisations to feel cheerful. There are neither compliance relaxations nor any tax incentives. The new additional relaxation under FCRA benefits government more than it does NGOs, but, what’s more disturbing are the seemingly minor changes to the Income tax Act 1961, whereby provisions under the head “Business & Profession” may apply with regard to taxation and assessment of trusts, societies and section 8 companies enjoying tax exemption u/s 11 or 10(23C) (iv), (v), (vi) & (via). 
Read on …

Amendment to Foreign Contribution Regulation Act (FCRA)
Clause 217 of the Finance Bill 2018 seeks to amend section 236 of the Finance Act, 2016 which relates to amendment to sub-clause (vi) of clause (j) of sub-section (1) of section 2 of the Foreign Contribution (Regulation) Act, 2010.

Readers may recollect that earlier companies registered under the Indian Companies Act 1956 or later under the Indian Companies Act 2013 having shareholding of more than fifty percent by Foreign Investors were deemed as ‘foreign source’.

Companies like HDFC Ltd. though registered and operating in India, but having more than fifty per cent foreign investors/shareholders were deemed as ‘foreign source’ under FCRA and consequently funds given by such companies whether to the company’s own foundation or other trusts, societies or section 8 companies was considered as ‘foreign contribution’.

Thanks to Amendment made to Section 2(1)(j)(vi) under the Finance Act 2016, Indian companies such as HDFC Ltd., which have more than fifty per cent FDIs or FIIs are now not treated as 'foreign source' with retrospective effect from 26th September 2010.

Please see our Blog Post of 29th July 2016 for more details: https://capnewsviews.blogspot.in/2016/07/who-is-foreign-who-is-not-mysteries-of.html

The Finance Bill 2018 now proposes to bring the said amendment with effect from the 5th August, 1976 i.e. the date of commencement of the original Foreign Contribution (Regulation) Act, 1976, which was repealed and re-enacted as the Foreign Contribution (Regulation) Act, 2010.

Let’s get a few facts clear:

1) Whether the amendment of Finance Act 2016 or the proposed Amendment of 2018, the government has not relaxed the law to oblige the voluntary sector. The law had been amended in 2016 and proposed to be amended even now to protect political parties which had violated the provisions of Section 2(1)(j)(vi) of FCRA even more than forty years ago or from the time the law was originally enacted during Late Mrs. Indira Gandhi’s Emergency. Any benefit that has come to NGOs is negligible and purely incidental.

2) Legally FCRA 1976 stands repealed and is replaced by FCRA 2010. It is a matter of debate how this amendment could be made applicable to a law that has already been repealed.

3) FCRA is not revenue or finance related subject and it is even more debatable how amendment to this law can be repeatedly placed under the Finance Bill.

It’s a clear case of ‘might is right’ and ‘government can do no wrong’! It is a mockery of the current regime’s motto of ‘less government; more governance’

Change in Section 11 & Section 10(23C) of Income Tax Act
The third proviso to clause (23C) of section 10 of the Income Act 1961 provides for exemption in respect of income of the entities referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) where such income is applied or accumulated during the previous year for certain purposes in accordance with the relevant provisions.

Section 11 of the Act also encompasses provisions relating to income from property held for charitable or religious purposes.

At present, there are no restrictions on payments made in cash by charitable or religious trusts or institutions. There are also no checks on whether such trusts or institutions follow the provisions of deduction of tax at source (TDS) under Chapter XVII-B of the Act. This has led to lack of an audit trail for verification of application of income.

In order to discourage cash transactions and to reduce the generation and circulation of black money, it is proposed to insert a new Explanation to section 11 to provide that for the purposes of determining the application of income under the provisions of sub-section (1) of the said section, the provisions of sub-clause (ia) of clause (a) of section 40, and of sub-sections (3) and (3A) of section 40A, shall apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.

Section 40(a)(ia) of the Income tax Act disallows as application of income every category of payment made to a resident on which tax is required to be deducted at source.

The existing provision of Section 40A(3) of the Income tax Act, provides that any expenditure in respect of which payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or electronic transfer (e.g. RTGS, NEFT), exceeds ten thousand rupees, shall not be allowed as a deduction.

Further, section 40A(3A) also provides for deeming a payment as profits and gains of business of profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year of a sum exceeding ten thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft oe electronic transfer.

It is also proposed to insert a similar proviso in clause (23C) of section 10 so as to provide similar restriction as above on the entities exempt under sub-clauses (iv), (v), (vi) or (via) of the said clause in respect of application of income.

The proposed amendment under Finance Bill 2018 will make the provisions of Sections 40(a)(ia), 40A(3) and 40A(3A) applicable to organisations enjoying exemption u/s 11 and 10(23C) (iv), (v), (vi) & (via) of Income tax Act 1961.

What does all this mean?
To put it simply and in just one sentence, provisions under the head “Business & Profession” will apply with regard to taxation and assessment of trusts, societies and section 8 companies enjoying tax exemption u/s 11 or 10(23C) (iv), (v), (vi) & (via).

In other words, once the Bill becomes Act, the following amount shall not be considered as application of income for the purpose of tax exemption u/s 11 or 10(23C) (iv), (v), (vi) & (via):
  • If any payment is made in excess of Rs.10,000/- other than by way of Account Payee Cheque or Account Payee Bank Draft or use of Electronic Clearing System (ECS) through a bank account or
  • If any application of income is claimed and provided for as liability and subsequently the liability in excess of Rs. 10,000/- is paid other than by paying by way of Account Payee Cheque or Account Payee Bank Draft or use of ECS through a bank account.
  • If the payments are subject to provision of Tax to be deducted at Source (TDS) and if TDS is not deducted thereon, then 30% of such sum payable shall not be considered as application. However, the same amount shall be considered as application in the year in which the corresponding tax is deducted & deposited with the government.

These amendments will take effect from 1st April, 2019 and shall, accordingly, apply in relation to the assessment year 2019-20 and subsequent years.