Depicts the brief view of FEMA...!!!

1. FEMA

3. INTRODUCTION
• Foreign exchange transactions were regulated by
Foreign exchange regulation act (FERA), 1973
• Following the liberalization ushered in 1991
some amendments were made to FERA in 1993
there was a lot demand to bring certain major
changes in FERA in the light of economic
changes took place
• Consequently a new act was formed to replace
FERA, known as Foreign exchange management
act (FEMA), 1999

4. Objectives
 The object of the Act is to consolidate and amend the
law relating to foreign exchange with the objective of
• To help RBI in maintaining exchange rate stability
• To conserve precious foreign exchange
• To prevent/regulate Foreign business in India
• facilitating external trade and payments and

5. Overview of FEMA
 The FEMA provides
• Free transactions on current account subject to
reasonable restrictions that may be imposed
• RBI control over Capital Account Transactions
• Control over realization of export proceeds
• Dealings in Foreign Exchange through Authorised
Person Adjudication of Offences
• Appeal provisions including Special Director
(Appeals) and Appellate Tribunal
• Directorate of Enforcement

6. Difference between
FERA & FEMA
• Object to conserve
and prevent misuse
• Violation was
Criminal Offence
and was non
compoundable
• It was a draconian
police law
• To facilitate external
trade and payments
• Violation is a civil
offence and is
compoundable
• It is a civil law

7. REGULATION AND
MANAGEMENT OF FOREIGN
EXCHANGE
 Dealing in foreign exchange-
 As per the Act no person shall-
• deal in or transfer any foreign exchange or foreign
security to any person not being an authorized person
• make any payment to or for the credit of any person
resident outside India in any manner
• enter into any financial transaction in India as
consideration for or in association with acquisition or
creation or transfer of a right to acquire, any asset
outside India by any person

8. Holding of Foreign
Exchange
• No person resident in India shall acquire, hold, own,
possess or transfer any foreign exchange/foreign
security or any immovable property situated outside
India
•

9. Current Account
Any person may sell or draw foreign exchange to or
from an authorized person if such sale or drawl is a
current account transaction: Provided that the Central
Government may, in public interest and in consultation
with the Reserve Bank, impose such reasonable
restrictions for current account transactions as may be
prescribed.

10. Capital Account
transactions
• As per sec 2 (e) “Capital account
transaction” means a transaction which
alters the assets or liabilities, including
contingent liabilities, outside India of
persons resident in India or assets or
liabilities in India of persons resident
outside India

11. RBI prohibits, restricts or regulate the following,
(a) Transfer or issue of any foreign security by a
person resident in India
(b) Transfer or issue of any foreign security by a
person resident outside India
(c) Transfer or issue of any security or foreign
security by any branch, office or agency in
India of a person resident outside India
(d) Any borrowing or lending in foreign exchange
in whatever form or by whatever name called

12. Export of goods
and services
• Every exporter of goods shall furnish to the Reserve Bank
such other information as may be required by the Reserve
Bank for the purpose of ensuring the realization of the export
proceeds by such exporter.
• The Reserve Bank may, for the purpose of ensuring that the
full export value of the goods or such reduced value of the
goods as the Reserve Bank determines, having regard to the
prevailing market conditions, is received without any delay,
direct any reporter to comply with such requirements as it
deems fit.
• Every exporter of services shall furnish to the Reserve Bank or
to such other authorities a declaration in such form and in such
manner as may be specified, containing the true and correct
material particulars in relation to payment for such services

13. Penalties for contravention
under FEMA
• The Penalty could be up to thrice the sum involved
where amount is quantifiable
• If the Amount is not quantifiable , penalty up to Rs
2 lacs can be imposed
• If contravention is of continuing nature, further
penalty up to Rs 5000 per day during which the
contravention continues can be imposed

14. Realisation and repatriation of
foreign exchange
• Realisation and repatriation of foreign
exchange.-Save as otherwise provided in this
Act, where any amount of foreign exchange is
due or has accrued to any person resident in
India, such person shall take all reasonable steps
to realize and repatriate to India such foreign
exchange within such period and in such manner
as may be specified by the Reserve Bank.