by admin on September 15, 2020 in Study Materials, UGC NET, UPSC Competitive Exams
UGC NET Foreign Exchange Management Act (FEMA) FEMA is a set of regulations that empowers the Reserve Bank of India to pass regulations and enables the Government of India to pass rules relating to foreign exchange in tune with the foreign trade policy of India. The Foreign Exchange Management Act, 1999 (FEMA) is an Act […]
Objectives of FEMA
- Facilitate external trade and payments.
- Promote the orderly development of the foreign exchange market in India.
- Maintain the foreign exchange reserves of India.
- Encourage liberalization and globalization of the Indian economy.
? Key Features of FEMA
- Decriminalization: FEMA is a civil law, not criminal like FERA.
- Current and Capital Account Transactions: It distinguishes between current account (day-to-day) and capital account (investment-related) transactions.
- Authorized Persons: Only authorized dealers (usually banks) can deal in foreign exchange.
- Resident Status: The act defines the term “person resident in India” for application purposes.
- Penalties: Provisions for penalties in case of contravention of rules and regulations.
?️ Scope of FEMA
FEMA applies to:
- All branches, offices, and agencies outside India owned or controlled by Indian residents.
- Any transaction that involves foreign exchange or foreign security.
- Export and import of currency.
?️ Enforcement and Regulation
- Reserve Bank of India (RBI): Regulates all aspects of foreign exchange under FEMA.
- Directorate of Enforcement (ED): Investigates violations of FEMA.
? Important Sections of FEMA
- Section 3: Restrictions on dealing in foreign exchange.
- Section 6: Capital account transactions.
- Section 7: Export of goods and services.
- Section 13: Penalties and enforcement.
- Section 36: Powers of the RBI to compound contraventions.