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FEMA 2000

FERA was passed in 1973 to regulate the foreign exchange transactions. In the light of economic liberalisation, some changes were made in 1993. But still there was a lot of demand for modifications to FERA

Finally FEMA came into effect from Janaury 1, 2000

To facilitate external trade and payments
To promote the orderly development and maintenance of foreign exchange market

Provisions of Act Dealing in foreign Exchange (SEC 3) Holding of Foreign Excahnge (SEC 4) Current account transactions(SEC 5)

Capital account transactions(SEC 6)

Export of goods and services(SEC 7)

Realisation and Repatriation(SEC 8)

Exemption in certain cases (SEC 9) Authorised Person (SEC 10) Reserve banks powers to issue directions to Authorised Person (SEC 11) Power of Reserve bank to India to inspect authorised person

Penalties (SEC 13) Any person who contravenes any provision of the act shall be liable to pay a penalty upto thrice the sum involved if the sum if quantifiable and upto 2 lakhs when the sum is not quantifiable. If any person fails to make full payment of penalty imposed on him with in 90 days, he shall be liable for imprisonment (under SEC14)