SEMINAR ON FEMA

FOREIGN EXCHANGE MECHANISM

• Statutory Basis for Exchange Control
• The Foreign Exchange Regulation Act, 1973
(FERA 1973), as amended by the Foreign
Exchange Management (Amendment) Act,
1999, forms the statutory basis for Exchange
Control in India.
 FEMA 1999
• The Foreign Exchange Management Act (1999) or in
short FEMA has been introduced as a replacement for
earlier Foreign Exchange Regulation Act (FERA). FEMA
came into force on the 1st day of June, 2000.
FEMA
• consolidate and amend the law relating to foreign
exchange
• facilitating external trade and payments
• promoting the orderly development and maintenance
of foreign exchange market in India
• 49 sections in the Act
 TO WHOM ACT IS APLICABLE
 The FEMA, is applicable-
To the whole of India.
Any Branch, office and agency, which is situated
outside India, but is owned or controlled by a person
resident in India.
 Broadly speaking FEMA, covers, three different types
of categories, and deals differently with them. These
categories are:
a) Person
b) Person Resident In India
c) Person Resident Outside India
 a) PERSON
• For the purpose of provisions, a person shall
include any of the following:
• 1. An individual
• 2. A Hindu Undivided family
• 3. A company
• 4. A Firm
• 5. Any agency, office or branch owned or
controlled by such person.
 b) PERSON RESIDENT IN INDIA
• 1. A person who has been residing in India for more
than 182 days, in the last financial year. This means if a
person has to be assessed, as to whether he is person
resident in India, for any offence committed in August
2001, then he should be residing in India for more than
182 days during April 2000 to March 2001
• 2. Any person or body corporate registered or
incorporated in India, or
• 3. An office, branch or agency in India owned or
controlled by a person resident outside India, or
• 4. An office, branch or agency outside India owned or
controlled by a person resident in India.
 c) Person resident outside India
• Simply putting it, "a person resident outside
India" means "a person who is not resident in
India
 Transactions Regulated by Exchange
Control
• Transactions having international financial implications
matters are regulated by Exchange Control:
a) Purchase and sale of and other dealings in foreign
exchange and maintenance of balances at foreign centers
b) Procedure for realization of proceeds of exports
c) Payments to non-residents or to their accounts in India
d) Transfer of securities between residents and
nonresidents and acquisition and holding of foreign
securities
• f) Export and import of currency, cheques, drafts, travelers cheques
and other financial instruments, securities, etc.
• g) Activities in India of branches of foreign firms and companies and
foreign nationals
• h) Foreign direct investment and portfolio investment in India
including investment by non-resident Indian nationals/persons of
Indian origin and corporate bodies predominantly owned by such
persons

• i) Setting up of joint ventures/subsidiaries outside India by Indian

companies

• j) Acquisition, holding and disposal of immovable property outside

India by Indian nationals resident in India.
 DUTIES OF AN AUTHORISED PERSON
• To comply with RBI directions
• Not to engage in un authorized transactions
Ensure compliance of FEMA provisions
• To produce books, accounts etc…
POWERS OF AN AUTHORISED PERSON
• To deal in or transfer any foreign exchange
• Receive payments by order
• To sell or purchase foreign exchange for
current account transactions
• To sell or purchase foreign exchange for
permissible capital account transactions
 POWERS OF RBI
• Verifying the correctness of any statements,
information or particular
• Obtaining information which such
authorized person has failed to furnish
• Securing compliance with the provisions of
Act
THANK U!!!!!!!!!!!!!!!!!