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Fema - Fera

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LAKSHYA SHARMA
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23 views

Fema - Fera

Uploaded by

LAKSHYA SHARMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lecture

FEMA(Foreign Exchange Management Act.)FERA(ForeignExchangeRegulationAct.)


(i)FERA Act. ForeignExchange Regulation Act.1974 came into force in 1974.
(ii)It imposed stringent regulations on certain kinds of payments ,dealings in foreign exchange,securities as well
as transactions which had an indirect impact on the foreign exchange and import –export of currency.

(iii)It was a restrict activity such as transaction corporation.

(iv)FERA consisted of 81 sections.

(v)This Act.emphasised strict exchange controls and controlled everything that was specified relating to foreign
exchange .

(vi)Law violators were treated as criminal offenders .

(vii)It aimed at minimising dealings in foreign exchange and foreign security .

Objectives

(iI)To regulate certain payments.

(ii)To regulate dealings in foreign exchange and security.

(iii)To regulate transactions, indirectly affecting foreign exchange.

(iv)To regulate import and export of currency.

(v)To conserve precious foreign exchange.

(vi)To attain proper utilisation of foreign exchange so as to promote the economic development of the country.

(vii)FERA could not facilitate external trade and payments. It failed to encourage the orderly maintenance and
development of foreign exchange market in India.

FERA to FEMA

(a) Foreign Exchange Regulation Act . (FERA ) was replaced by NDA Govt. In 1998 , the Foreign Exchange
Management Act (1999) .

(b)FEMA became an Act. on the 1st day of June, 2000.

© FEMA was introduced because the FERA didn’t fit in with post- liberalization policies.

(d)A significant change that the FEMA brought with it, was that it made all offenses regarding foreign
exchange civil offenses, as opposed to criminal offences dictated by FERA .

(e)The main objective behind the Foreign Exchange Management Act. (1999) is to consolidate and amend the
law relating to foreign exchange with the objective of facilitating external trade and payments.

( f ) It was also formulated to promote the orderly development and maintenance of foreign exchange
market in India.

(g)FEMA is applicable to all parts of India.

(h)The act is also applicable to all branches, offices and agencies outside India owned or controlled by
a person who is a resident of India.
(i)The FEMA head-office, also known as Enforcement Directorate is situated in New Delhi and is headed by a
Director.

(j)The Directorate is further divided into 5 zonal offices in Delhi, Mumbai, Kolkata, Chennai and Jalandhar and
each office is headed by a Deputy Director.

(k)Each zone is further divided into 7 sub-zonal offices headed by the Assistant Directors and 5 field
units headed by Chief Enforcement Officers.

(l)FEMA was expected to relax the controls on foreign exchange in India as a result of economic liberalization.
(m)It served to make transactions for external trade –exports and imports easier.

(n)Transactions involving current account for external trade no longer required RBI’ permission .

(o)The deals in foreign exchange were to be managed instead of regulatedas was in FERA.The switch to FEMA
shows the change in the attitude on the part of Govt. In terms of foreign capital .

(p)FEMA has formally recognised the distinction between current account and capital account transactions.

(q)Two Golden rules or principles in FEMA

(i) All Current Account transactions are permitted unless otherwise prohibited ,

(ii). All capital account transactions are prohibited unless otherwise permitted .

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