FEMA, 1999 (Syllabus: GS Paper 3 – Economy)

Context: The Reserve Bank of India (RBI)  released a draft 'Licensing Framework for Authorised Persons (APs)' under Foreign Exchange Management Act (FEMA), 1999.

Authorised persons

• An authorised person is an entity authorised by the Reserve Bank of India to deal in forex. It can be an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under Sub-Section (1) of Section 10 of FEMA. 

Foreign Exchange Management Act (FEMA), 1999

• About: FEMA primarily addresses provisions related to cross-border trade and payments, defining procedures for foreign exchange transactions in India.
• Introduced: In 1999.
• Replacement of FERA: FEMA replaced the earlier Foreign Exchange Regulation Act (FERA) and has since governed foreign exchange transactions in the country.
• Headquarter: Delhi.
• Objectives of FEMA

oTo facilitate external trade and payments in India.

oEnsure the orderly development and maintenance of the foreign exchange market.

oFacilitate transactions involving foreign exchange or foreign security, with payments from outside to India through authorized persons.

oEncourage dealings in foreign exchange under the current account through authorized entities.

oAuthorize the Reserve Bank of India to impose restrictions on capital account transactions.