Unit - 62 : Foreign Exchange Management Act , 1999 The provisions of FEMA extends to all over India and also applies to all branches , offices and agencies outside India owned or controlled by a person resident inn india and also to any contravention committed outside India by any such person to whom this Act applies .
Under the FEMA any violation of the provisions of the said act will attract penal provisions including the right of arrest and detention.
Authorized Person means any bank or other person including authorized money changer or dealer, authorized under the FEMA to deal in foreign exchange or securities .
Capital Account Transaction means a transaction by which there may be a change in the assets and liabilities outside India of persons resident in India or assets or liabilities in India of persons resident outside India .
Current Account Transaction means a transaction other than a capital account transaction .
Currency is defined under the FEMA not only to include all currency notes but also postal notes , postal orders , money orders, cheques , drafts , or such other similar instruments as may be notified by the RBI.
Foreign Currency is defined to mean any currency other than Indian currency .
Foreign Exchange is much wider than the term foreign currency.
FERA: The main objective of the Foreign Exchange Regulation Act, 1973 (FERA)was to: · consolidate and amend the law, · regulate certain payments, · dealing in foreign exchange, · the import and export of currency, for the conservation of the foreign exchange resources of the country, · and finally the proper utilization of this foreign exchange so as to promote economic development of the Company.
FEMA: The object of enacting Foreign Exchange Management Act, 1999(FEMA) is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Regulation and Management of Foreign Exchange
1. Deal transfer any foreign exchange / foreign security to any person other than an authorised person 2. makes any payment to any person resident outside India. 3. Receive any payment on behalf of any person resident outside India 4. Enter into any financial transaction in India in relation to a right to acquire any asset outside India by any person.
Powers of RBI with Respect to Authorised Persons
1. To appoint authorised person deals in foreign exchange. 2. RBI has the power to inspect the authorised persons so appointed to ensure that the said person complies with all the rules and regulations of RBI.
Contravention, Penalties, Adjudication and Appeals(585) 1. An adjudicating Authority can enquire contravention under FEMA only if complaint is filed by Central Government. 2. Adjudicating Authority has to endeavour to dispose off the complaints within one year from the date of receipt of the complaint.
Penalty can be levied up to thrice the sum involved in such contravention where such amount is quantifiable or upto Rs.2 Lakh. Where the amount is not quantifiable and where such contravention is a continuing one, further penalty of Rs.5 thousand per day