Foreign Exchange Management Act

(FEMA)
1. The Foreign Exchange Management Act (FEMA) was
implemented in the year 1999.
2. It replaced the Foreign Exchange Regulation Act (FERA),1973
3. RBI is the regulatory authority for FEMA.
4. The Act provides for entities to be authorized either as authorized
dealers or as money changers.
5. Money changers can either be full-fledged or restricted.
6. Full-fledged- Authorized to buy and sell foreign exchange
whereas
restricted money changers can only buy the foreign exchange.
8. Money changers can only deal in notes, coins and traveler’s
cheques.
9. Authorized dealers are allowed to deal in all the items classified
as foreign exchange by FEMA
 Foreign Exchange-Meaning
• Foreign Exchange is defined in terms of Sec.2
of FEMA, as foreign currency including:
ii. All deposits, credits, balance payable in any
foreign currency
iii. Any drafts, travelers’ cheques, letters of credit
and bills of exchange expressed or drawn in
Indian currency and payable in foreign
currency;
iv. Any instrument giving anyone the option of
making it payable either partly or fully in a
foreign currency.