The Supreme Court on Wednesday recommended that the Centre enact a law to regulate the funding of NGOs with public money and penalise them for fraudulent activities. A three-judge bench led by Chief Justice JS Khehar has given the Centre eight weeks to respond to which of the two it would prefer – regulating NGOs by finalising guidelines or through legislative measures, The Indian Express reported.

The bench pointed out that the Centre’s guidelines may not be “truly systematic” and sufficient to deal with the entire process of accreditation, the way manner public money is used to fund NGOs and their audit. Guidelines submitted by the government earlier included appointing Niti Aayog as the nodal body to register such organisations.

The instructions – framed by the Rural Development Ministry submitted to the top court on April 4 – also detailed the process to execute bonds, blacklist NGOs, cut off their grants, recover money through civil lawsuits and take criminal action in cases where funds were swindled. The court, however, noted that Niti Aayog could be preoccupied with a number of other important tasks.

Moreover, the court said that the ministry’s Council for Advancement of People’s Action and Rural Technology could take civil and criminal action against the 703 NGOs that had been flagged for defaulting. Capart had also recommended registering 159 FIRs against a number of NGOs for misappropriation of government funds, according to The Hindu.

The funding of NGOs, especially through the Foreign Contribution Regulation Act, has been in the news as the Centre has been cancelling the licences of thousands of NGOs for allegedly violating provisions of the law. NGOs and activists, however, have deemed the step a means to suppress dissenting voices. On March 9, the United States had said that foreign NGOs face challenges in India, after global children’s aid organisation Compassion International was made to shut down its operations in the country.