Authority

FEMA permits only authorised person to deal in foreign transactions and securities.

Dealing in Foreign Exchange Except as provided in terms of the Act, or with the special permission of the Reserve Bank, no person shalla. Deal in any foreign exchange or foreign security with any person other than an authorised person. b. Make any payment to or for the credit of any person resident outside India in any manner; c. Receive otherwise through an authorised person, any payment by order or on behalf of any person outside India in any manner; d. Enter in to any financial transaction in India as a consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. No person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India.

Capital Account Transactions Current Account Transactions

Capital Account Transactions (By a person resident in India) 1. Investment in foreign securities 2. Loan raised in foreign currency in India or abroad 3. Acquisition or transfer of immovable property outside India. 4. Guarantees issued in favour of a person resident outside India 5. Export, import or holding of currency or currency notes 6. Loans and overdrafts from a person resident outside India; 7. Maintenance of foreign currency accounts in India and outside India 8. Insurance policy from an insurance company outside India 9. Remittance of capital assets outside India 10. Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad

On capital account transactions

Two types of prohibitions General Prohibitions A person shall not undertake or sell or draw foreign exchange to or from an authorised person for any capital account transactions, subject to circulars and notifications specified by RBI. Special Prohibitions A non resident person shall not make investment in India in any form in any company or partnership firm or proprietary concern or any entity, whether incorporated or not, which is engaged or proposes to engage, - In the business of chit funds - as nidhi company - in agricultural or plantation activities - in real estate business or construction of farm houses - in trading in Transferable Development Rights (TDRs)

Current Account Transactions A transaction other than a capital account transaction also includes, 1. payments due in connection with - foreign trade - other current business or services, - Short term banking and credit facilities in ordinary course of business. 2. payments due as - interest on loans - Net income from investments - remittances for living expenses of parents, spouse and children residing abroad - expenses in connection with foreign travel, education and medical care of parents, spouse and children

On current account transactions

Foreign Exchange Management (current account transactions) rules, 2000 The Classification of current account transactions which are, - Totally prohibited - Permitted, subject to the prior approval of concerned ministry, Central government - Permitted, subject to prior approval of the RBI Exhaustive List For transactions not covered in this notifications, authorised dealers are free to release foreign exchange upon the satisfaction that the transactions will not involve and is not designed for violation of the act or rule made there under.

The Reserve Bank may, without prejudice to the generality of this, prohibit, restrict or regulate the following;
Transfer or issue of any foreign security by a person resident in India; Transfer or issue of any security by a person resident outside India; Transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India; Any borrowing or lending in foreign exchange in whatever form or by whatever name called; Any borrowing or lending in foreign exchange in whatever form or by whatever name called between a person resident in India and a person resident outside India; Deposits between persons resident in India and persons resident outside India; Export, import or holding of currency or currency notes;

The Reserve Bank may, without prejudice to the generality of this, prohibit, restrict or regulate the following;
8. Transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident outside India; 9. Acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India; 10. Giving of a guarantee or surety in respect of any debt, obligation or other liability incurred- By a person resident in India and owed to a person resident outside India; or - By a person resident outside India.

A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired held or owned by such person when he was resident in India or inherited from a person who was resident outside India.

The Reserve Bank may prohibit, restrict or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business.

The reserve bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business.

EXPORTS

Exporter of goods Exporter of Services

REALISATION AND REPATRIATION OF FOREIGN EXCHANGE CONTRAVENTION AND PENALTIES

ADMINISTRATION OF FEMA

FERA v/s FEMA

All v/s only specified Aim 49 sections v/s 81 sections No appearance in FEMA