Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd
Upload
47 views

Foreign Exchange Management Act, 1999

FEMA regulates foreign exchange transactions in India. It replaced FERA due to changes like increased forex reserves and liberalization. RBI administers FEMA regulations. FEMA covers areas like dealing in foreign exchange, holding forex, current account transactions like travel, gifts, and capital account transactions like property transfers. Exporters must realize receipts within 6 months, and importers can buy forex up to $100 million per transaction if allowed by trade policy.

Uploaded by

deoredevangi
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
47 views

Foreign Exchange Management Act, 1999

FEMA regulates foreign exchange transactions in India. It replaced FERA due to changes like increased forex reserves and liberalization. RBI administers FEMA regulations. FEMA covers areas like dealing in foreign exchange, holding forex, current account transactions like travel, gifts, and capital account transactions like property transfers. Exporters must realize receipts within 6 months, and importers can buy forex up to $100 million per transaction if allowed by trade policy.

Uploaded by

deoredevangi
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 13

FEMA

Foreign Exchange Management act,


1999
Exchange control
• Exchange control means official interference in the foreign
exchange dealing of a country
• Exchange controls are administered by RBI as the central
authority with the regulations provided under a statutory
act FEMA
Need for FEMA
• Significant developments have taken place since 1993 such as
1. Substantial increase in forex reserves
2. Growth in foreign trade
3. Current a/c convertibility
4. Liberalization of exchange and interest rates
5. Increased participation of FII in Indian stock markets.
• Keeping in mind the changed environment, Central govt decided to
introduce FEMA and repeal FERA
• Objective has change from controlling to facilitating external trade
and payments.
Broad areas covered under
regulation of foreign exchange
• Imposition of various tariff and non tariff
barriers to conserve forex reserves.
• Significant reduction due to the impact of
WTO
• Specific rules under FEMA cover various
regulations
-
Dealing in Holding of
Foreign Foreign
exchange exchange

FEMA Current a/c


transactions

Export and
Import of
Goods and Capital a/c
services transactions
1. Dealing in Foreign exchange
• Dealing in forex can only be done through
Authorized Dealers (AD)
• Unless allowed by the act, no person shall
transfer, receive, pay or deal in forex
without the general/special permission of
RBI.
2. Holding of Foreign Exchange
1. AD : can hold currency and coins within
his scope and limit as per his registration
2. Person resident in India : cannot hold more
than 2000 USD or equivalent foreign
currency notes, travelers cheques acquired
by him on his stay abroad and retained.
3. Not a permanent resident in India (<3yrs):
can hold unlimited amounts.
3. Current a/c transactions
• Drawal of foreign exchange is prohibited for:
1. Remittance for lottery, horse race and other
hobbies
2. Travel / Transportation to Nepal and Bhutan
3. Payment of commission of exports to joint
ventures / subsidiaries of Indian companies
abroad.
Prior approval of RBI required for gifts, donations or
travel exchange if it exceeds beyond a certain limit
Contd……..

• Prior approval required for


1. Cultural tours
2. Advertising in foreign print media
3. Prize money/sponsorship if sports
activities except by
state/national/international; sports body if
amount > 1 lakh USD
4. Payments of health insurance from foreign
insurance companies.
Contd……
• No approval is required if amt is spent
from
1. Resident Foreign Currency a/c
2. Exchange earners foreign currency a/c
3. Payment through international debit cards
4. Capital a/c transactions
• RBI specifies class of capital transactions
i.e. transactions which alter asses and
liabilities, which are permissible and limits
upto which foreign exchange is admissible
for each.
Contd….

• It includes :
1. Transfer or issue of any foreign security
2. Lending or borrowing in foreign exchange
3. Lending or borrowing in Rs. outside India by a
person in India
4. Inter country deposits
5. Inter country transfer of immovable properties
6. Export, import or holding of foreign currency
notes.
5. Export and imports of Goods
and Services
1. Every exporter of goods and services should
furnish details of full value of exports and the
amount receivable
2. Such receipts should be realized and repatriated
to India within 6 months of the date of export to
get any export benefits.
3. All imports permitted by the trade policy qualify
the importer to buy foreign currency provided
the amount does not exceed USD 100 mn per
transaction

You might also like