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Foreign Exchange Management Act: Difference between revisions
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| citation = [http://legislative.gov.in/sites/default/files/A1999-42_0.pdf Act No. 42 of 1999] | | citation = [http://legislative.gov.in/sites/default/files/A1999-42_0.pdf Act No. 42 of 1999] | ||
| enacted_by = [[Parliament of India]] | | enacted_by = [[Parliament of India]] | ||
| | | Published in Gazette = 29 December 1999 | ||
Enacted on. = 1 June 2000 | |||
| repeals = [[Foreign Exchange Regulation Act]] | | repeals = [[Foreign Exchange Regulation Act]] | ||
| status = currently it is not in force | | status = currently it is not in force | ||
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}} | }} | ||
The '''Foreign Exchange Regulation Act''' ('''FERA''') was legislation passed in [[India]] in 1973<ref>{{Cite web|url=http://www.gktoday.in/foreign-exchange-regulation-act-1973-fera/|title=Foreign Exchange Regulation Act 1999 (FERA) - General Knowledge Today|website=www.gktoday.in|access-date=2016-04-01}}</ref> that imposed strict regulations on certain kinds of payments, the dealings in [[foreign exchange market|foreign exchange]] (forex) and [[securities]] and the transactions which had an indirect impact on the foreign exchange and the import and export of [[currency]].<ref name="rbi">http://rbi.org.in/scripts/PublicationReportDetails.aspx?ID=377</ref> The bill was formulated with the aim of regulating payments and foreign exchange.<ref name="rbi"/><ref>{{Cite web|url=https://indiankanoon.org/doc/27905/|title=The Foreign Exchange Regulation Act, 1973|website=indiankanoon.org|access-date=2016-04-01}}</ref> | The '''Foreign Exchange Regulation Act''' ('''FERA''') was legislation passed in [[India]] in 1973<ref>{{Cite web|url=http://www.gktoday.in/foreign-exchange-regulation-act-1973-fera/|title=Foreign Exchange Regulation Act 1999 (FERA) - General Knowledge Today|website=www.gktoday.in|access-date=2016-04-01}}</ref> that imposed strict regulations on certain kinds of payments, the dealings in [[foreign exchange market|foreign exchange]] (forex) and [[securities]] and the transactions which had an indirect impact on the foreign exchange and the import and export of [[currency]].<ref name="rbi">{{Cite web|url=http://rbi.org.in/scripts/PublicationReportDetails.aspx?ID=377|title = Reserve Bank of India - Reports}}</ref> The bill was formulated with the aim of regulating payments and foreign exchange.<ref name="rbi"/><ref>{{Cite web|url=https://indiankanoon.org/doc/27905/|title=The Foreign Exchange Regulation Act, 1973|website=indiankanoon.org|access-date=2016-04-01}}</ref> | ||
FERA came into force with effect from January 1, 1974.<ref>{{Cite web|url=http://www.karmayog.org/centralgovtacts/centralgovtacts_6243.htm|title=The Foreign Exchange Regulation Acts (FERA) {{!}} Government | FERA came into force with effect from January 1, 1974.<ref>{{Cite web|url=http://www.karmayog.org/centralgovtacts/centralgovtacts_6243.htm|title=The Foreign Exchange Regulation Acts (FERA) {{!}} Government Acts (Alphabetically) {{!}} Central Govt. Acts (in alphabetical order) {{!}} www.karmayog.org|website=www.karmayog.org|access-date=2016-04-01}}</ref>{{better|date=April 2017}} | ||
FERA was introduced at a time when foreign exchange (Forex) reserves of the country were low, Forex being a scarce commodity. FERA therefore proceeded on the presumption that all foreign exchange earned by Indian residents rightfully belonged to the Government of India and had to be collected and surrendered to the [[Reserve Bank of India]] (RBI). FERA primarily prohibited all transactions not permitted by RBI.<ref>{{Cite web|url=http://www.moneycontrol.com/glossary/property/fera_613.html|title=FERA|website=www.moneycontrol.com|access-date=2016-04-03}}</ref>{{better|date=April 2017}} | FERA was introduced at a time when foreign exchange (Forex) reserves of the country were low, Forex being a scarce commodity. FERA therefore proceeded on the presumption that all foreign exchange earned by Indian residents rightfully belonged to the Government of India and had to be collected and surrendered to the [[Reserve Bank of India]] (RBI). FERA primarily prohibited all transactions not permitted by RBI.<ref>{{Cite web|url=http://www.moneycontrol.com/glossary/property/fera_613.html|title=FERA|website=www.moneycontrol.com|access-date=2016-04-03}}</ref>{{better|date=April 2017}} | ||
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The buying and selling of foreign currency and other debt instruments by businesses, individuals and governments happens in the foreign exchange market. Apart from being very competitive, this market is also the largest and most liquid market in the world as well as in India. It constantly undergoes changes and innovations, which can either be beneficial to a country or expose them to greater risks. The management of foreign exchange market becomes necessary in order to mitigate and avoid the risks. Central banks would work towards an orderly functioning of the transactions which can also develop their foreign exchange market. Foreign Exchange Market Whether under FERA or FEMA’s control, the need for the management of foreign exchange is important. It is necessary to keep adequate amount of foreign exchange. | The buying and selling of foreign currency and other debt instruments by businesses, individuals and governments happens in the foreign exchange market. Apart from being very competitive, this market is also the largest and most liquid market in the world as well as in India. It constantly undergoes changes and innovations, which can either be beneficial to a country or expose them to greater risks. The management of foreign exchange market becomes necessary in order to mitigate and avoid the risks. Central banks would work towards an orderly functioning of the transactions which can also develop their foreign exchange market. Foreign Exchange Market Whether under FERA or FEMA’s control, the need for the management of foreign exchange is important. It is necessary to keep adequate amount of foreign exchange. | ||
FEMA served to make transactions for external trade and easier – transactions involving current account for external trade no longer required RBI’s permission. The deals in Foreign Exchange were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the change on the part of the government in terms of for the capital.<ref>{{Cite web|url=http://www.yourarticlelibrary.com/economics/indian-economy/main-features-of-the-foreign-exchange-management-act-fema/39551/|title=Main Features of the Foreign Exchange Management Act (FEMA)|website=YourArticleLibrary.com: The Next Generation Library|language=en-US|access-date=2016-04-03}}</ref> | FEMA served to make transactions for external trade and easier – transactions involving current account for external trade no longer required RBI’s permission. The deals in Foreign Exchange were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the change on the part of the government in terms of for the capital.<ref>{{Cite web|url=http://www.yourarticlelibrary.com/economics/indian-economy/main-features-of-the-foreign-exchange-management-act-fema/39551/|title=Main Features of the Foreign Exchange Management Act (FEMA)|website=YourArticleLibrary.com: The Next Generation Library|date=7 May 2014|language=en-US|access-date=2016-04-03}}</ref> | ||
==Main Features== | ==Main Features== | ||
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== References == | == References == | ||
{{Reflist|30em}} | {{Reflist|30em}} | ||