F O R E I G N E X C H A N G E M A N A G E M E N T A C T, 1 9 9 9

(FEMA)

GROUP-8
FOREIGN EXCHANGE MANAGEMENT
ACT
• The Government of India formulated FEMA to encourage the external payments and across the
border trades in India.

• The Foreign Exchange Management Act (1991) has been introduced as a replacement for earlier
Foreign Exchange Regulation Act (FERA). FEMA came into force on 1st June, 2000

• FEMA head office is known as Enforcement Directorate and is situated in heart of city of Delhi.

• There are 49 Sections in the Act.

TO WHOM THE ACT IS APPLICABLE?

Foreign Exchange Management Act is applicable:

To the whole of India

Any Branch, office and agency, which is situated outside India but is owned and controlled by a
person, resident in India.
OBJECTIVES
The main objective of FEMA is to utilize foreign exchange resources of the country efficiently. It
includes the following:

• To consolidate and amend the laws relating to Foreign Exchange.

• To facilitate external trade and payments.

• To promote orderly development and maintenance of foreign exchange markets in India.

SALIENT FEATURES
• FEMA gives power to the central government for imposing restriction on activities like
making payments to a person situated outside of the country or receiving money through
them. Apart from this, foreign exchange as well as foreign security deals is also restricted by
FEMA.

• Transactions revolving around foreign security or foreign exchange as well as payments made
from any foreign country to India cannot be made without specific or general permission of
FEMA. All transactions must be carried out via an individual who has received authorization
for the same.

• The central government can restrict an authorized individual to carry out foreign exchange
deals within the current account, on the basis of general interest of the public.
FEATURES (CONTD….)

• Even though drawing or selling of foreign exchange is carried out via an authorized individual,
the FEMA Act empowers the Reserve Bank of India to place a number of restrictions on the
transactions of the capital account.

• Under the act, the Indian residents have the permission to conduct foreign exchange and foreign
security transactions or the right to hold or own immovable property in a foreign country in
case the security, property or currency was acquired or owned when the individual was based
outside of the country, or when they inherit the property from another individual staying outside
the country.
THANK YOU