What is foreign currency Act?

The Foreign Exchange Regulation Act (FERA) was legislation passed in India in 1973 that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange (forex) and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.

What is foreign currency in simple words?

The currency of any foreign country which is authorized medium of circulation and the basis for record keeping in that country. Foreign currency is traded by banks either by the actual handling of currency or checks, or by establishing balances in foreign currency with banks in those countries.

What is the importance of FEMA?

What is the importance of FEMA? The main objective of FEMA was to help facilitate external trade and payments in India. It was also meant to help orderly development and maintenance of foreign exchange market in India. It defines the procedures, formalities, dealings of all foreign exchange transactions in India.

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What is Foreign Exchange Management Act 2000?

The Foreign Exchange Management Act (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA became an act on the 1st day of June, 2000. … It was also formulated to promote the orderly development and maintenance of foreign exchange market in India.

What is foreign currency used for?

Countries use foreign currency reserves to keep a fixed rate value, maintain competitively priced exports, remain liquid in case of crisis, and provide confidence for investors. They also need reserves to pay external debts, afford capital to fund sectors of the economy, and profit from diversified portfolios.

Who can deal in foreign currency?

Ans. An Authorised Dealer (AD) is any person specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on www.rbi.org.in) and normally includes banks.

What is foreign exchange example?

Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro. … Rather, the forex market is an electronic network of banks, brokers, institutions, and individual traders (mostly trading through brokers or banks).

Who controls FEMA?

FEMA is a federal agency within the U.S Department of Homeland Security (DHS). The FEMA administrator reports directly to the DHS Secretary. The administrator also has a direct line of access to the U.S. President during periods of disaster response.

Is FEMA a civil law?

6) This FEMA Act is a civil law and any kind of contraventions of the Act provide for arrest only in the exceptional cases.

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Who introduced FEMA?

14 min read. The Central Government of India formulated an act to encourage external payments and across the border trades in India known as the Foreign Exchange Management Act. FEMA (Foreign Exchange Management Act) was introduced in the year 1999 to replace an earlier act FERA (Foreign Exchange Regulation Act).

Why is Foreign Exchange Management Act important in transaction?

In India, the Foreign Exchange Management Act (FEMA) governs foreign exchange transactions and remittance payments, and the Reserve Bank overlooks the management of the foreign market. FEMA provides a framework for the smooth functioning of border trades and developing the Indian foreign exchange market.

How does foreign exchange regulation act work critically analyze the statement?

Some of the key features of the act are as follows: Authorisation by RBI to any person/company to deal in foreign exchange. Authorisation to the dealers by the Reserve Bank of India for transacting foreign currencies, subject to review and revocation of the authorisation in the case of non-compliance.

What are the main provisions of Foreign Exchange Management Act 1999?

Major Provisions of FEMA Act 1999:

Control over the realization of export proceeds. Dealing in foreign exchange through authorized persons like an authorized dealer or money changer etc. Any person can sell or withdraw foreign exchange, without any prior permission from RBI and then can inform RBI later.

Why is money called currency?

Originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia and in Ancient Egypt. In this first stage of currency, metals were used as symbols to represent value stored in the form of commodities.

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What is the importance of currency?

Currency is the physical paper notes and coins in circulation. By accepting the currency, a merchant can sell his or her goods and have a convenient way to pay their trading partners. There are other important benefits of currency too. The relatively small size of coins and dollar bills makes them easy to transport.

What is the difference between money and currency?

The major difference between Money vs Currency is that money is entirely numerical i.e. it’s only intangible which one cannot touch or smell whereas currency can be touch and smell and its tangible.