Q2.

Describe FEMA Regulation for Import of Goods and Services Answer: The main objective of apply FEMA is to reduce the restriction on foreign exchange.
Any offense in foreign exchange will be civil offense not criminal offense. This law's main objective is to increase the flow of foreign exchange in India. Under this law, one can bring limited foreign currency in India without any legal barrier.

According to section 7 of FEMA 2000, It is the duty of exporter to declare the true and correct detail of goods which , he have to sell the market outside India and must send complete report to RBI . RBI can make particular requirement for any exporter. RBI can also make rules and regulations for realization of amount earned from foreign country. Following are the FEMA regulations for Import of Goods and Services: Authorised Dealers should not open L/C or allow remittances for import of goods included in the negative list requiring licence for imports Any person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him or for any other purpose for which acquisition of exchange is permissible Where foreign exchange acquired has been utilised for import of goods into India the AD should ensure that importer furnishes an evidence of import to his satisfaction Remittances against imports should be completed not later than six months from the date of shipment except in cases where amounts are withheld towards guarantee of performance etc Authorised Dealers may permit settlement of import dues delayed due to disputes, financial difficulties etc Import documents should be received from the banker of the supplier by the banker of the importer in India. However, status holder exporters, all limited companies and wholly owned subsidiaries of foreign companies (from their principals) can receive documents directly from the exporters. Other importers can receive documents directly provided the import value does not exceed USD 100,000. Authorised dealers, at the request of importer customers, may also receive import documents directly from the overseas supplier, provided the authorised dealer is fully satisfied about the financial standing/ status and track record of the importer customer. Before extending such facility, authorised dealer should obtain report on each individual overseas supplier from the overseas banker or reputed credit agency

Where imports are made in non-physical form, i.e., software or data through internet/datacom channels and drawings and designs through e-mail/fax, a certificate from a Chartered Accountant that the software/data/drawing/design has been received by the importer, may be obtained. Authorised Dealers should advise importers to keep Customs Authorities informed of the imports made by them In case an importer does not furnish any documentary evidence of import, as required within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the Authorised Dealer should rigorously follow-up for the next 3 months, including issue of registered letters to the importer. Authorised Dealers should forward to Reserve Bank a statement on half-yearly basis as at the end of June & December of every year furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance. Gold may be imported by the nominated agencies/banks on consignment basis where the ownership will remain with the supplier and the importer (consignee) will be acting as an agent of the supplier (consignor). Remittances towards the cost of import shall be made as and when sales take place and in terms of the provisions of agreement entered into between the overseas supplier and nominated agency/bank. Authorised Dealers should ensure that due diligence is undertaken and all Know-Your-Customer (KYC) norms and the Anti-Money-Laundering guidelines are adhered to while undertaking import gold transactions. Any large or abnormal increase in the volume of business of the importer should be closely examined to ensure that the transactions are bona fide trade transactions Nominated agencies/approved banks can import gold on loan basis for lending to exporters of jewellery under this scheme. On the other hand EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only. Know Your Customer (KYC) guidelines and Anti Money Laundering (AML) This policy document is prepared in line with the RBI guidelines and incorporate the Bank's approach to customer identification procedures, customer profiling based on the risk perception and monitoring of transactions on an ongoing basis. The objective of KYC guidelines is to prevent the Bank from being used, intentionally or unintentionally, by criminal elements for money laundering activities.

Obligations under Prevention of Money Laundering [PML] act 2002 (i) maintaining a record of prescribed transactions (ii) Furnishing information of prescribed transactions to the specified authority (iii) Verifying and maintaining records of the identity of its clients (iv) Preserving records in respect of (i), (ii), (iii) above for a period of 10 years from the date of cessation of transactions with the clients Policy Objectives (i) To prevent criminal elements from using the Banking System for money laundering activities. (ii) To enable the Bank to know/understand the customers and their financial dealings better, which in turn would help the Bank to manage risks prudently. (iii) To put in place appropriate controls for detection and reporting of suspicious activities in accordance with applicable laws/laid down procedures. (iv) To comply with applicable laws and regulatory guidelines. (v) To take necessary steps to ensure that the concerned staff are adequately trained in KYC/AML procedures. Key Elements of the Policy Customer Acceptance Policy The Bank will: (i) Classify customers into various risk categories and based on risk perception decide on acceptance criteria for each category of customers: (ii) accept customers after verifying their identity as laid down in Customer Identification Procedures: (iii)not open accounts in the name of anonymous / fictitious /persons: (iv) strive not to inconvenience the general public, especially those who are financially or socially disadvantaged. Customer Identification Procedures The first requirement of customer identification procedure is to be satisfied that a prospective customer is who he/she claims to be The second requirement of customer identification procedures is to ensure that sufficient information is obtained on the nature of the business that the customer expects to undertake and any expected or predictable pattern of transactions. The information collected will be used for profiling the customer Customers will be classified into three risk categories namely High, Medium and Low, based on the risk perception. The risk categorization will be reviewed periodically. Customer Identification will be carried out in respect of nonaccount holders approaching bank for high value one-off

transaction as well as any person or entity connected with a financial transaction which can pose significant reputational or other risks to the Bank. Monitoring of Transactions Monitoring of transactions will be conducted taking into consideration the risk profile of the account. Special attention will be paid to all complex, unusually large transactions and all unusual patterns, which have no apparent economic or viable lawful purpose Risk Management While the bank has adopted a risk based approach to the implementation of this Policy. It is necessary to establish appropriate framework covering proper management oversight, systems, controls and other related matters. Banks Internal Audit of compliance with KYC/AML Policy will provide an independent evaluation of the same including legal and regulatory requirements. Concurrent/Internal Auditors shall specifically check and verify the application of KYC/AML procedures at the branches and comment on the lapses observed in this regard. The compliance in this regard will be placed before the Audit Committee of the Board at quarterly intervals All employee training programmes will have a module on KYC Standards AML Measures so that members of the staff are adequately trained in KYC/AML Principal Officer [Money Laundering Reporting Officer] Bank will designate a senior officer as Principal Officer who shall be responsible for implementation of and compliance with this policy. His illustrative duties will be as follows: Monitoring the implementation of the banks KYC/AML policy. Reporting of transactions and sharing of the information as required under the law. Maintaining liaison with law enforcement agencies. Ensuring submission of periodical reports to the top Management / Board.