Foreign Exchange Management Act, 1999 Revised Final
Foreign Exchange Management Act, 1999 Revised Final
Foreign Exchange Management Act, 1999 Revised Final
BBM
With the liberalization and globalization, it was felt that the Foreign
Exchange Regulation Act 1973 (FERA) should be replaced by a more
business friendly enactment. With this view in mind, the Foreign Exchange
Management Act, 1999 (42 of 1999) (FEMA) was passed.
Objective:
The object of Foreign Exchange Regulation Act, 1973 (FERA) was to conserve
the foreign resources, whereas the objects of the Foreign Exchange
Management Act, 1999 (FEMA) were to consolidate and amend the law
relating to Foreign Exchange with the objective of facilitating external trade
and payments for promoting the orderly development and maintenance of
foreign exchange market by India.
Scope of the Act: (Means where all this Act applies and How it
applies)
1. This Act may be called the Foreign Exchange Management Act, 1999.
3. It shall also apply to all branches, offices and agencies outside India
owned or controlled by a person resident in India and also to any
contravention thereunder committed outside India by any person to
whom this Act applies.
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under the Act, without seeking approval of the Reserve Bank / Government
of India.
(b) Similar freedom is also given to a resident who inherits such security or
immovable property from a person resident outside India.
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(2) 'Currency' - [Section 2(h)]: The currency includes all currency notes,
postal orders, money orders, cheques, drafts, travelers cheques, letters
of credit, bills of exchange and promissory notes, credit cards or such
other similar instruments, as may be notified by the Reserve Bank.
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(i) an individual;
(ii) a hindu undivided family;
(iii) a company;
(iv) a firm;
(v) an association of person or a body of individuals, whether any of the
proceeding sub-clauses.
(7) 'Security' - [Section 2(za)]: Security means shares, stocks, bonds and
debentures. Government securities as defined in the public debt Act,
1944 (18 of 1944), Saving Certificates to which the Government savings
Certificate Act, 1859 (46 of 1959) applies, deposit receipts in respect of
deposits and securities and units of the Unit Trust of India established
under Sub-section (1) of Section 3 of the Unit Trust of India Act, 1963
(52 of 1963) or of any mutual fund and including certificates of title to
securities, but does not include bills of exchange or notes other than
Government Promissory Notes or any other instrumentals which may be
notified by the Reserve Bank as the security for the purposes of this Act.
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(i) Payment due in connection with foreign trade, other current business,
services and short-term banking and credit facilities in the ordinary
course of Business.
(ii) Payments due as interest on loans and as net income from investments.
(iii) Remittances for living expenses of parents, spouse and children residing
abroad, and
(iv) Expenses in connection with foreign travel, education and medical care
of parents, spouse and children.
Dealing in Foreign Exchange, Etc., - [Section 3]: ---- who can deal in
Foreign Exchange
(a) deal in or transfer any foreign exchange or foreign security to any person
not being an authorized person;
(b) make any payment to or for the credit of any person resident outside
India in any manner;
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(2) The Reserve Bank may, in consultation with the Central Government,
specify :
(a) any class or classes of capital account transactions which are
permissible;
(b) the limit up to which foreign exchange shall be admissible for such
transactions:
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such form and in such manner as may be specified, containing true and
correct material particulars, including the amount representing the full
export.
(b) 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.
(2) 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.
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