The act came into effect with June 1, 2000 and extend to entire country. FEMA deal with foreign exchange matters. ¨Objective of FEMA :
i) Facilitating external trade and payment.
ii) Promoting the orderly development and maintenance of foreign exchange market in India. ¨Administration of FEMA : By RBI
i) It can give direction, rules, notification, guidelines etc.
ii) For contravention of these, RBI can impose penalty upto Rs.10,000/- and may extend up to Rs.2000/- per day in case of continuation of default / delay.
¨Crurent Account Transactions :
i) Sch I : Prohibited transactions
ii) Sch II : Require government approvals
iii) Sch III : Personnel remittances up to a limit
iv) Other transactions : Trade, services and unilateral remittances etc without any monetary limit ¨ ¨Capital Account Transactions :
These transactions includes investment and borrowing in foreign currency as notified by RBI.
These transactions affect the asset and liabilities
Foreign Exchange Remittance Facilities for Residents
¨Nepal & Bhutan :
No release of forex for travel or trade ¨Form of Forex :
i) Cash up to USD 3000 equ. Balance in TC or bank draft or any other mode.
ii) For Iraq and Libya, cash upto USD 5000 equ. Balance in TC or bank draft or any other mode.
iii) For Iran, Russian Federation and other Republic of commonwealth countries, no ceiling for cash. ¨Time for Purchase :
Forex to be used within 180 days of purchase ¨Mode of purchase :
In cash up to Rs.50,000/-, above this, to the debit of account by way of cheque, draft ¨Surrender of unspent foreign exchange :
180 days from the date of return ¨Retention of foreign exchange :
USD 2000 equ., lawfully acquired. No restriction on coins. ¨
Exchange Earner’s Foreign Currency Account (EEFC)
¨ ¨Account holder :
Exporters of goods and services, joint account with close resident relative in former/survivor style. ¨Source of funds :
Up to 100% of foreign exchange earning can be placed in this account. ¨Use of funds :
As per permitted debit and credit allowed by RBI ¨Type of account :
Only current account. Amount deposited in particular month, to be converted into rupee by last day of next month. ¨Loans :
No loan can be allowed against balances held in such account.
Foreign Currency Deposit Accounts for Resident Indians
Resident Foreign Currency Account(RFC) :
Account Holder : who was earlier NRI and become resident
Source of Funds : Legitimate F/C funds acquired abroad
Joint Account :Permitted as former and survivor
Type of A/c : SF, CA, FD
Repatriation of funds : Permitted
Use of funds : No restriction
Interest : As per banks policy
Resident Foreign Currency(Deposit) Account – RFC(D) : ¨
Account Holder : Resident individual ¨
Source of funds : Foreign exchange acquired by resident ¨
Type of A/c : CA Amount deposited to be converted in rupee by last day of next month ¨
Interest : No interest ¨
Use of funds : For all permitted transactions