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Foreign Exchange Management Act, 1999

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  • Change in objectives: FERA vs FEMA
  • Aims of FEMA
    • Facilitate external trade and payments
    • Promotion of orderly development of foreign exchange markets
  • Rules / Regulations
    • Rules notified by Central Government…(Current account )
    • Regulations notified the Reserve Bank of India (RBI), (Capital account)
    • Consultation between RBI and the Central Government.
  • Role of RBI
  • A.P. (Dir Series) – issued from time to time
  • Master Circulars – one in a year (July)
  • FAQs (updated available on
  • Section 1: Specified the Scope of the Act.
    • Extends to whole of India.
    • Applies to all branches, offices and agencies outside India, of person resident in India.
    • Applies to contravention committed outside India by any person to whom the Act applies.
  • Section 2(u): Defines Person. A "person" includes: Individual, HUF, Company, Firm, AOP or a BOI, whether incorporated or not
    • Every artificial juridical person, not falling within any of the preceding sub-clauses, and
    • Any agency, office or branch owned or controlled by such persons
  • Section 2(v) defines Person resident in India (PRI)
  • Section 2(w) - Person resident outside India (PROI)
  • Who is a Non Resident Indian (NRI)?
    • NRI has been defined under FEMA Regulation 2(vi) of the FEMA - 5 (Deposit) Regulations 2000 as follows:
    • "An NRI is a person resident outside India who is a citizen of India or is a Person of Indian Origin"
    • It is possible that you may be an NRI under FEMA, yet you may be a resident under the Income tax laws.
  • Who is a Person of Indian Origin (PIO)? Different definitions given by different regulations
  • Difference between Capital Account Transaction and Current Account Transaction
  • Section 3- Dealing in Foreign Exchange, etc.
  • Section 4- Holding of Foreign Exchange, etc.
  • Section 5- Current Account Transactions
  • Section 6- Capital Account Transactions
  • Section 7 – Export of goods and services
  • Section 8 – Realization and repatriation of foreign exchange
  • Section 9 – Exemption from realization and repatriation in certain cases
  • Section 10 – Authorized Person (AP)
  • Section 11 – Control / Penalty on Authorized Person
  • Section 12– 19- Penalties/Adjucating Authorities
  • FEMA Current Account Transaction Rules
  • Liberalized Remittance Scheme (‘LRS’)
  • Schemes for Inbound Investment
  • Inbound Investment Process
  • Routes of Investment : Automatic, Approval Route, Restricted List

Bare Act

An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.


  • Section 1: Short title, extent, application and commencement
  • Section 2: Definitions
  • Section 3: Dealing in foreign exchange, etc.
  • Section 4: Holding of foreign exchange, etc.
  • Section 5: Current account transactions.
  • Section 6: Capital account transactions.
  • Section 7: Export of goods and services.
  • Section 8: Realisation and repatriation of foreign exchange
  • Section 9: Exemption from realization and repatriation in certain cases
  • Section 10: Authorised person
  • Section 11: Reserve Bank's powers to issue directions to authorized person
  • Section 12: Power of Reserve Bank to inspect authorised person
  • Section 13: Penalties
  • Section 14: Enforcement of the orders of Adjudicating Authority
  • Section 15: Power to compound contravention
  • Section 16: Appointment of Adjudicating Authority
  • Section 17: Appeal to Special Director (Appeals)
  • Section 18: Establishment of Appellate Tribunal
  • Section 19: Appeal to Appellate Tribunal
  • Section 20: Composition of Appellate Tribunal
  • Section 21: Qualifications for appointment of Chairperson, Member andSpecial Director (Appeals)
  • Section 22: Term of Office
  • Section 23: Term and Conditions of service
  • Section 24: Vacancies
  • Section 25: Resignation and removal
  • Section 26: Member to act as Chairperson in certain circumstances
  • Section 27: Staff of Appellate Tribunal and Special Director (Appeals)
  • Section 28: Procedure and powers of Appellate Tribunal and Special Director(Appeals)
  • Section 29: Distribution of business amongst Benches
  • Section 30: Power of Chairperson to transfer cases
  • Section 31: Decision to be by majority
  • Section 32: Right of appellant to take assistance of legal practitioner orchartered accountant and of Government, to appoint presenting officers
  • Section 33: Members, etc., to be public servants
  • Section 34: Civil court not to have jurisdiction
  • Section 35: Appeal to High Court
  • Section 36: Directorate of Enforcement
  • Section 37: Power of search, seizure, etc.
  • Section 38: Empowering other officers

Chapter VII: Miscellaneous

  • Section 39: Presumption as to documents in certain cases
  • Section 40: Suspension of operation of this Act
  • Section 41: Power of Central Government to give directions
  • Section 42: Contravention by companies
  • Section 43: Death or insolvency in certain cases
  • Section 44: Bar of legal proceedings
  • Section 45: Removal of difficulties
  • Section 46: Power to make rules
  • Section 47: Power to make regulations
  • Section 48: Rules and regualations to be laid before Parliament
  • Section 49: Repeal and saving

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