Overview

The Foreign Exchange Regulation Act, 1973 (FERA) was repealed and a new Act called the Foreign Exchange Management Act, 1999 (FEMA) came into force with effect from June 1, 2000. The objective of the new dispensation is to facilitate external trade and payments and promote orderly development and smooth conduct of foreign exchange market in India.

Facilitator of Forex Transactions

Since the procedures have been simplified and powers have been delegated to the Authorised Persons under the FEMA, 1999, the role of the Foreign Exchange Department is minimum so far as individual citizens are concerned. Persons resident in India have to simply approach the Authorised Persons for their foreign exchange needs. Guided by the Current Account Rules notified, from time to time by the Government of India and Capital Account Regulations notified by the Reserve Bank, the Authorised Persons will facilitate foreign exchange transactions of individuals. The Reserve Bank processes only those applications which require its prior approval under Foreign Exchange Management (Current Account Transactions) Rules and (Capital Account Transactions) Regulations.

Compounding of FEMA Contraventions

In keeping with the spirit of the FEMA, the Government of India has empowered the Reserve Bank under section 15 of the Act to compound the contraventions of all sections of FEMA, 1999 except section 3(a) of the Act. Under compounding the contravener has the option of voluntarily admitting to the contravention, pleading guilty and seeking redressal. The process provides comfort to individuals and corporates that have inadvertently contravened FEMA while taking serious view of wilful, mala fide and fraudulent transactions.

Contact the Executives