femr ppt - copy

8/6/2019 Femr Ppt - Copy

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PRESENTATION ON INTERNATIONAL

BUSINESS

TOPIC :- FOREIGN EXCHANGE REGULATION ACT

TOPIC :- FERA AND FEMAttD

FOREIGN EXCttHANGE MANAGEMENT

ACT


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y What is meant by FOREX ?

y What is FERA and FEMA ?

y Why is it necessary to replace FERA by FEMA ?

y What are the objectives of FEMA ?y How different is FEMA from FERA ?

y How does the change from FERA to FEMA affect common

citizens ?

QUESTIONS ??????


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y The Foreign Exchange Regulation Act of 1973 (FERA) inIndia was repealed on 1 June, 2000. It was replaced by

the Foreign Exchange Management Act (FEMA),which was passed in the winter session of Parliament in1999. Enacted in 1973, in the backdrop of acuteshortage ofForeign Exchange in the country

y FEMA was introduced because the FERA didnt fit inwith post-liberalisation policies. A significant change thatthe FEMA brought with it, was that it made all offensesregarding foreign exchange civil offenses, as opposed tocriminal offenses as dictated by FERA.


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FERA :--

y FERA was introduced when FOREX reserves of the

contry were low

y Fera prroceeded on the presumption that all foreign

exchange earned by Indian residents rightfully beloged toGovernment of India and had to be collected and

surrendered to the RBI

y IT regulated not only transaction in FOREX , but also all

finanvial transactions with non residents .y FERA primarily prohibited all transaction , except to the

extent permitted by general or specefic permission by RBI .


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FEMA :--

y FEMA is an act to consolidate and ammend the law relating

to FOREX with the objective of facilitating external trade

and paymentys and for promoting the orderly development

and maintenance of theFOREX market in India .


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FOREX :---

y Whwn trade tales place between the residents of two countries ,

the two countries being a soverign sttate have their own set of

regulationsa and currency . Due to this problem arises in the

conduct of Itrade and settlement of the transaction . While theexporter would like to get the payment in the currency of his

own contry , the importer can pay only in the currency of the

importers country .Thi creates a need for the conversion of the

currency of one contry is gets converted into the currency ofanother country .The conversion is done by banks who deal in

foreign exchange .


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Extent of FEMA :- Foreign Exchange Management Act (FEMA) is applicable

to the entire country. Agencies, branches, and offices, outside India, that are

owned by Indian residents, also fall under the jurisdiction of this act.

HEAD OFFICE :- The FEMA head office also known as Enforcement Directorate is

situated in New DelhiThe Directorate is further divided into 5 zonal offices in Delhi,

Mumbai, Kolkata, Chennai and Jalandhar and each office is headed by a Deputy

Director. Each zone is further divided into 7 sub-zonal offices headed by the AssistantDirectors and 5 field units headed by Chief Enforcement Officers.


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OBJECTIVES OFFERA 1973

Was to consolidate and ammend the law regulating :

y Certain payments .

y Dealings in foreign exchange and securities

y Transaction , inderictly affecting FOREX

y The import and export of currency , for the conservation of the

FOREX resources of the contry .

y The proper utilisation of ths FOREX so as to promote the

economic development of the country .y Promote the orderly development and maintenance of foreign

exchange market .


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PURPOSE OFFERA

y To help RBI in maintaining exchange r rate stability

y To converse precious foreign exchange .

y To prevent or regulate foreign bussiness in India .


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WHYTHERE WAS A NEED TO SCRAP

FERA ??

y The FERA was replaced by the FEMA as it was animpediment in Indias to go global .

y Withdrawal of FOREX :-

For the purpse of c/r ac transaction , has beenremoved . However the CENTRAL govt may in publicinterst in consultation with the RBI impose such reasonablerestriction for c/r a/c transaction as may be prescribed .

y FEMA has removed the restriction on transaction in forex on

a/c of trade in goods , services except for retaining certainenabling provision for the Central govt to impose reasonablerestriction inpublic interest .


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DIFFERNCES BETWEEN FERA AND

FEMA

FERA FEMA

Anything and everything

that has to do with foreign

exchange was controlled

Aim of FERA is to prevent

misuse of ForeignTrade.

Any offence under FERA was a

criminal offence ,

FERA had 81 sections.

Only the specified acts

related to foreign

exchange are regulated .The aim of FEMA is

facilitatingTrade.

The offence under FEMA is a civil

offence only punishable uwith

penalty .

FEMA has only 49 sections


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FEMA AFFECT ON CITIZENS

y If you had ever visited a relative abroad, or had non-resident

relatives visiting you, the chances are high that you had also

violated FERA. In such cases, it is highly likely that your relativesmay have given you or your visiting family members some small

gift in forex, which you spent on buying some small article which

you wanted to bring back. Or you may have spent some money on

hospitality towards your non-resident relatives visiting you.

Strictly, speaking, till the 1990's, these were FERA violations.


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Similarities between FERA and FEMA

y The RBI and central government woould continue to be the

regulatory bodies .

y Presumption of extra territorial jurisdiction as envisaged in

section (1 ) of FERA has been retained .

y The Directorate of Enforcement continues to be the agency

for enforcement of the provision of the law such as

conducting search and seizure .


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