The document discusses the Foreign Exchange Management Act of 1999, which consolidates and amends laws relating to foreign exchange in India to facilitate external trade and payments. It establishes rules and authorities for regulating foreign exchange transactions, capital account transactions, current account transactions, and remittances by residents and non-residents. The act aims to promote an orderly foreign exchange market in India through regulations on authorized dealers and permissible currency dealings.

1. GENERAL AWARENESS ABOUT FEM
Presented By:
Sunil Modgill
NRO0212523

2. • World of Globalisation
• Dealing in Foreign Currency when
enterprise
– Import goods
– Export goods
– Make investments abroad

5. Foreign Exchange Management
Act, 1999.
Applicability
Extends to whole of
India.
All branches,
offices and agencies
outside India, owned
or controlled by PRI.
Any contravention
committed outside
India by any person
to whom this Act
applies.
Investor Friendly Legislation

6. •Facilitate external trade and payments
•Promote the orderly development and
maintenance of foreign exchange market in
India.
•Consolidate and amend the law relating to
foreign exchange.

7. ADMINISTRATION
OF FEMA
Rules, regulations and norms laid down by
RBI in consultation with CG.
Authorities for holding inquiries
Adjudicating Authorities
Special Directors (Appeals)
Appellate Tribunal
Director of Enforcement, for taking up
investigations.

8. I. Only Authorized persons permitted to deal in foreign
exchange.
II.They include:-
I. authorised dealer Authorize
d
II.money changer
III.off-shore banking unit
Persons
III.They are free to release foreign exchange upto the
prescribed limits upon their satisfaction

9. PROHIBITIONS IN DEALING
• Any person other than
Authorised person is prohibited
to:-
– Deal in or transfer any foreign
exchange or foreign security to
any person.
– Make any payment to or for the
credit of any person resident
outside India.
– Receive any payment by order or
on behalf of any person resident
outside India.
– Enter into any financial transaction in
India to acquire any asset outside India.

10.  Upto 3 times the sum involved in the
contravention.
 Upto Rs. 2,00,000 – if the amount involved in
contravention is not quantifiable.
 Upto Rs. 5,000 per day – if the
contravention continues.
 Any currency, security or any other money
or property in respect of which the
contravention has taken place shall be
confiscated to the CG.

11. CAPITAL ACCOUNT
TRANSACTIONS
• Transaction which alters:-
assets or liabilities outside India of PRI
assets or liabilities in India of PROI
• RBI with CG empowered to specify permissible capital
account transactions along with prescribed limits.

12. No restrictions on withdrawal of
currency for:-
amortization of
loans
depreciation of
direct investments
No restrictions on
holding of assets:-
Acquired by a PRI
outside India when he
was a PROI
PRI acquired due to
inheritance
Categories of permitted
Capital Account
Transactions:-
permitted to persons
CAPITAL ACCOUNT resident in India
TRANSACTIONS permitted to non-
residents
There are also some transactions
not permitted to non-residents

13. – Transactions include:-
» Other than a capital
account transactions
» Payments due in
connection with normal
business trade.
» Payments dueon interest.
» Remittances.
» Expenses for travelling,
education, etc.
– CG in consultation with RBI
can impose reasonable
restrictions on withdrawal.

14. For some transactions withdrawl is:-
Totally prohibited
Permitted, subject to the prior approval of
concerned Ministry, CG
Permitted, subject to prior approval of RBI.

15. LIBERALISED REMITTANCE
SCHEME
• For Resident Individuals only.
• Remittance upto US $ 200,000
per financial year.
• Not available for the transactions
» Totally prohibited
• Require the prior approval of CG.

16. Indian rupee fully convertible w.r.t
current account transactions.
Non-residents freely allowed remitting
outside India the income or capital
gain generated in India.
Indian rupee w.r.t capital account
transactions not fully convertible.