Question

Q. With reference to the Foreign Exchange Management Act (FEMA), consider the following statements:

Which of the statements given above is/are correct?

• A. 1 only
• B. 2 and 3 only
• C. 1 and 3 only
• D. All of the above

Answer 1

The correct option is C 1 and 3 only

Explanation:

• Statement 1 is correct: Foreign Exchange Management Act, 1999 (FEMA) came into force by an act of Parliament. It was enacted on 29 December 1999. The Foreign Exchange Management Act officially came into force on 1st June 2000. FEMA replaced an act called Foreign Exchange Regulation Act (FERA).
• Statement 2 is incorrect: FEMA made all the criminal offenses as civil offenses. If there was a violation of FEMA rules, then it is considered a civil offense.
• Statement 3 is correct: For External trade and remittances, there is no need for prior approval from the Reserve Bank of India (RBI). However, In the general interest of the public, the Government of India can restrict an authorized individual from carrying out foreign exchange deals within the current account. It also empowers RBI to place restrictions on transactions from capital accounts even if it is carried out via an authorized individual.