Foreign Exchange Management Act, 1999

Object Facilitating the external trade and payments and promoting foreign exchange market in india.

Important Definintions Section 2 Foreign exchange Foreign security Current account transaction Capital account transaction Sceurity

Regulation and Management of foreign exchange Section 3 – Dealing with foreign exchange. Except as provided in this Act or its rules or with the permission of RBI no person shall deal with foreign exchange or foreign security or make any payment to a person resident out of india or accept any payment from him or enter into any financial transaction to accrue any property out siding here.

Section – 6 The power of the Reserve Bank This bank may regulate transfer of any foreign security by a person resident in india or outside india Borrowing or lending of foreign exchange Deposits b/w the person resident in india and outside india Holding of currency notes Accusation of the property by a foreign national Giving of guarantee to a foreign national.

Chapter – 3 Authorized person On application, reserve bank may authorize such persons to deal with foreign exchange and foreign securities who are known as authorized dealers or money changer or offshore banking unit upon various conditions. The authorized person shall be bound to comply all the directions issued by the reserve bank form time to time.

Chapter 4 – Contravention and Penalty Section – 13 Penalties Any contravention of this act or the rules shall be met by a penalty up to thrice the amount involved in the contravention if the contravention is quantifiable or up to Rs. 2lakhs where it is non quantifiable. This penalty will be fixed by the adjudicating authority under this Act. Simultaneously adjudicating authority can confisticate he legal property or money involved in this case to the central govt.

Section 14 – Execution of orders of adjudicating authority If the person is not paying the penalty within 90 days of demand notice, he may be detained to the civil prison for a period of 3 years if the amount is 1 crore or more. For 6 months – if the amount in the demand notice is below 1crore.

Section 15 and 18 This contravention is compoundable under section 15 on application. The 1st appeal from the order of adjudicating authority will go to appellate tribunal under this Act and the 2nd appeal will go to High court.

Chapter 6 – Directorate of Enforcement Section 36 – Directorate of Enforcement will exercise the powers and duties provided under this Act.

Section 37 – Power of investigation IO’s in this case may be the director of Enforcement and other officers not below the rank of Asst. Director. Besides any officer of central govt. or state govt. or RBI may authorize by the central govt. by notification for investigation