Foreign Exchange Management Act, 1999 - Summary

Popularly known as FEMA – the Act is the Bible of all Forex transactions that happen in the country – it is the Holy Rule Book of foreign exchange transactions and of the administration part too.


It is important here to know a little history of FEMA:

FEMA actually has a predecessor – a stricter, meaner and a draconian predecessor, popularly called the FERA.


Foreign Exchange Regulation Act, 1974 or FERA – was introduced in the year 1974 with the prime objective of ‘conserving/ preserving’ the foreign exchange; which means the forex transactions were severely controlled to avoid misuse – as it was considered a scarce resource.

Also – the mean part – if an offence was committed under FERA it was considered a ‘criminal offence’!

With time, economic liberalization, globalization, better forex transaction infrastructure and opening of the world market, need was felt to do away with FERA as its provision resulted in constricting the growth of forex and ultimately the economy at large.

Thus at the turn of the millennium and India’s coming of age FEMA was introduced in 2000, on 1st June, with the Foreign Exchange Management Act, 1999.

FEMA stands for:

  • Facilitating foreign exchange transaction – exports, imports, and payments thereof; 
  • Promoting development of forex; 
  • Maintenance of a healthy forex market in the country.


Salient Features of FEMA:

  1. FEMA is applicable to Individuals (you and me!), HUFs, companies, firms and AOPs and BOIs.

  2. FEMA is applicable to a person Resident in India – as opposed to FERA’s citizenship criteria – which means if the status of any person, who is a citizen of India or not, is ‘Resident’ he or she shall be covered under the FEMA for any forex transaction as per the given provisions.

  3. Under FEMA – a person, who has been residing in India for more than 182 days, will be considered a ‘Resident’!

  4. ‘Currency’ under FEMA includes debit cards, ATM cards and credit cards too!

  5. FEMA treats offences committed under the Act as civil offences.

  6. Only ‘Authorized Persons’ can deal in foreign exchange – all our transactions will be routed through them.

    Authorized Persons are nothing but authorized dealers – authorized by the RBI; and they have to follow RBI guidelines very strictly to keep their licenses.

  7. We are permitted by RBI to buy forex from Post Offices in the form of postal/ money orders! Easy availability in the time of emergency requirements!

  8. Any monetary transaction with Nepal or Bhutan – in rupees – these two countires recognize and accept ‘Rupees’ – will not fall under FEMA!

  9. ‘Capital Account’ transactions are those transactions which alter the assets and liabilities of a person – buying/ selling of foreign securities, borrowing/ lending of loans, purchase/ sale of immovable properties etc – and all these being across national boundaries!

    NO restrictions on forex transaction for repayment of loans – important to know!

  10. ‘Current Account’ transactions are those other than capital and are mostly personal in nature like remittances for living expenses for studies/ medical treatment abroad, foreign travel, foreign business etc.

    Current Account transactions are categorized into three explicitly drawn out categories which spell out the transactions allowed and not allowed -
    (i) those which are prohibited by FEMA,
    (ii) those which require Central Government’s permission,
    (iii) and those which require RBI’s permission.

    (I’m listing the absolutely important points to remember here.)

  • Prohibited Current Account transactions (V.Imp!!!!) – you can’t draw foreign exchange for:-
1.      Forex can’t be drawn for making payment to any person in Nepal or Bhutan! Use Rupees!
2.      Remitting lottery winnings outside India.
Remitting any income from winning in any races/ horse races/ hobbies etc.
3.      You can’t remit any money outside India for the purchase of lottery tickets, or banned magazines, sweepstakes, betting etc.
4.      You can’t draw forex for making payments on any ‘Call Back Services’ on telephone calls – call back is when you call and then immediately get a call back being routed through the telephone services of a company where charges are lower.

  • Approval of Central Government needed for:

1.      Drawal of forex for taking cultural tours outside India.
2.      If state government or its undertakings advertise in foreign print media (for any purpose other than promotion of tourism, investments – exceeding USD 10,000) – then CG approval needed!
3.      Remittance of prize money, sponsorship of sporting activities abroad by persons other than sporting bodies – if the amount being remitted exceeds USD 1,00,000.
4.      Remittance for hiring of transponders by ISPs and TV channels.


  • Approval of RBI needed for:-

1.      For infrastructure projects – if the consultancy is taken from outside India and the remittance for such exceeds USD 1,00,00,000 per project.
2.      For any other projects – if the consultancy is taken from outside India and the remittance for such exceeds USD 10,00,000.
3.      Approval of RBI needed to release forex in excess of USD 10,000 in one financial year.
4.      Approval of RBI needed for gift/ donation remittances in excess of USD 5,000 in one financial year, per remitter or donor (the receiver of the gift remittance)
5.      Exceeding USD 1,00,000 for persons going abroad for employment/ emigration.
6.      Exceeding USD 25,000 for business travel, attending conference etc.
7.      Medical treatment abroad – based on doctor’s estimate of expenses – if doctor’s estimate exceeds USD 1,00,000 – then no approval is required.

  1. The limit under Liberalised Remittance Scheme, has be increase to USD 2,50,000 per financial year for permissible current or capital account transaction or a combination of both, whereby all resident individuals, including minors, are allowed to freely remit to that extent – the increase came in 2015.

    This 11th point  has been asked in a couple of interviews irrespective of candidate’s educational background - so keep this new limit in mind for upcoming exams and/ or interviews!!

    That is all for today folks – hope you have a good start to the week and of the new financial year!



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86 comments:

  1. Respected Sir/Mam


    I got 111and cutoff is 88(Haryana-SC).But My IBPS Clerk IV interview was a stress kind of interview.I had not confidence during interview and had gone nervious.Their faces were looking unimpressed.Now I am afraid that they will fail me.plzz plzz tell me is there any hope for me or not.......

    ReplyDelete
  2. Retirements from ODIs after world cup-2015

    MichaelClarke----Australia
    ShahidAfridi-------pakistan
    Misbah-ul-Haq---Pakistan
    MahelaJayawardene----Sri Lanka
    KumarSangakkara----Sri Lanka
    KhurramKhan----U A E
    BrendanTaylor----Zimbabwe

    ReplyDelete
  3. BRO......I TOLD IBPS RRB PO/OA

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  4. All the best
    sure selection

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  5. Hahahaaa.....bhaaag saale...kuch b likhega tu

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  6. U r a senseless person...moron...shut up

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  7. Hahahaaa.....bhaaag saale...kuch b likhega tu

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  8. akad kyu rha h itna bc tu

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  9. Chal nikal....hurrrr

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  10. Sorry friend... I thought for PO...

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  11. Maharashtra general cut off. - 92 & OBC - 88
    Correct it

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  12. what did they ask in interview?

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  13. Does this mean ibps po 4 result will be delayed?

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  14. thnk u amit

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  15. u r from gujrat or from other state ??

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  16. Hi Raman
    I have a small query regarding my interview
    I have done it very well
    I am expecting 80+ marks do they give it or they have any limit for giving marks in interview.

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  17. sir spelling mistake....in History of FEMA;- "scarce resource" not "scare resource" :-)

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  18. Raman Sir what you are providing us is very helpful and really appreciable. Please don't bother silly people's comments. Thanks for information.

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  19. hello sir...please confusion door karna meri

    DOCUMENTS TO BE PRODUCED AT THE TIME OF JOINING sutlej gramin bank

    i) A Bond of Rs.60000/- (Rs. sixty thousand only) a
    long with one surety of equal
    amount, acceptable to the Bank on prescribed profo
    rma (On Non Judicial Stamp Paper) for
    rendering continuous service for a minimum period o
    f two years from the date of joining
    the Bank.


    whats it means?yeh stamp paper ka kya chakkar hai?60000 abhi jma krwa dene hai

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  20. finger crossed.....:)

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  21. haan yr yeh to thik hai ...par jo agreement performa dia hai use stamp paper pe print krwa ke bhrna hai kya...please help very confused





    .........Have a look......Is form ko fill karna hai ya stamp paper pe ise print krake???

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  22. Daddy,i miss u :'( :(March 31, 2015 at 5:56 AM

    Result ayega kab 31 v aa gyi...

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  23. yar bank mein call kro aur apni query pucho lo.

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  24. U R FAKEEEEEEEEEEEE

    ReplyDelete
  25. thanks ki kya baat bhai..mhenat ki hai tune toh sucess toh milegi hi

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  26. ssa raman sir aap online ho ta ek gal da jwab de do result aayega kal ke ni if u have any inside info regarding this thnks

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  27. I agree over here it is written the case is vs The Institute of Bank Personnel Selectio whereas the full form of IBPS is Institute of Banking Personnel Selection

    ReplyDelete
  28. Raman sir please provide the gk capsule for FCI assistant grade 3 exam sir

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  29. Please wait for results, I am not an Astrologer!

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  30. Right now I am working Monthly GK Digest

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  31. Ni ayega? Ya informtn ni hai?

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  32. my score 145 gen punjab cutoff 116.my chances?

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  33. @manoj singh
    They are not interested in Reserve List candidates. After all they need to run their institute and they need fresh students. Further please don't target any other site/blog here. They just copy-paste news and articles from whole web and books.

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  34. DO U KNOW CLERK IV FINAL RESULTS EXPECTED DATE

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  35. Sir, No other website published it because they know its not credible......
    In the kerala high court website it is said that the status is pending
    and there is no supporting document available to verify what you have
    posted.... If you have consulted with any high court lawyers, you would've known its fake.... May be you are so gullible or you are looking to increase the number of visitors to your page..... I am not sure about that..... Earlier you said that your target is 5000 and now you are saying that your target is 1000?????? Out of the 14lakh+ Bank aspirants, Petition has earned the support of Just 909 members in 2 weeks..... How come its a success???? If IBPS comes under RTI, the only thing we can get from them is just the vacancy list.....

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  36. Anybody frm karnataka here?

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  37. when will be the results,do u have any idea?
    thanks

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  38. Yaaro, result kab ayegi?

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  39. Also I am pretty sure that HC order cannot be printed the way sir has posted the Photo. Not sure, just asking... Paper is placed cross and matter is printed straight...

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  40. YEH hai available same thing on kerala high court website

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  41. I don't trust BA too...

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  42. I AM SO HAPPY TODAY AS THE IBPS CALL CENTER GUYS SPEAK SOMETHING NEW THAN USUAL 2 ANSWERS (1.REFER NOTIFICATION 2.VISIT OUR WEBSITE).SO MANY RUMORS SPREAD ABOUT EXTENDING THE VALIDITY PERIOD OF PO&CLERK III .
    IBPS CALL CENTER GUYS TOLD THAT THE VALIDITY PERIOD OF CLERK &PO III IS GOING TO EXPIRE BY TODAY.I, e ON 31-03-2015.AND THEY CLEARLY SAID THAT THE RESULTS OF IBPS PO&CLERK IV WOULD BE DECLARED WITHIN 3 DAYS......

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  43. I am from Telangana, cutoff is 121 and i scored 125 and my interview was good.What are my chanches?

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  44. I scored 94 in xs general cat whereas cutoff is 61 . what are the chances frds

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  45. First they ignore you then honour you Raman

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  46. Po ka result aa gya h kya

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  47. Here the no of applicant for rrb matters....

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  48. FOR AN EXAMPLE TAKE ANDHRA NEARLY 80% CANDIDATES HAVE MARKS MORE THAN 130 ...NOW WHATS MATTER

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  49. "No other website published it". Search now, they started copying it.

    I posted this documentation after consulting a high court lawyer.

    "you are looking to increase the number of visitors to your page" - Nobody care about people who are searching for results. I already said that I need loyal readers who need Bank exams notes. Getting millions of unrelated visitors is not my goals.

    Petition to bring IBPS under RTI - I don't have time to promote it as I am involved in multiple projects.

    That's all

    Please be polite here.

    ReplyDelete
  50. when ibps clerk - 4 final result is coming ? pls update

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  51. hi sir
    good evng
    query..
    will they select waiting list students?(clrk 3)
    plz reply...

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  52. is this minimum cut off or maximum

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  53. hi
    whthr waiting list ppl r selected (clrk 3)??

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  54. Jo log is post ko fake bata rahe the wo is link ko zara check kar le shayad unki aatma ko shanti mil jae - http://www.bankersadda.com/2015/03/1st-april-will-not-be-judgement-day.html

    ReplyDelete
  55. Hat's of to RAMANDEEP Sir for providing the correct and earliest information . Keep it up :)

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  56. Thanks for your valuable suggestion Mr. Raman

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  57. are u in waiting list?
    clrk or po?

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  58. No logic! Look at the screenshot you posted... It says every thing... I agree the case do exists but the photo you posted looks like a edited photo kinda... I really respect you for backing up the reserve list candidates... But I can't just take that photo to believe at first...

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  59. Ok lets hope that it is true..........Sir,kindly i want to know;wat is today's status for it ...

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  60. Ok lets hope that it is true..........Sir, kindly let me know today's status for it ...

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  61. So what we should except from IBPS they should give the exact cut off?? Practically its not possible to collected data from each rrbs and ask will they recruit this year what is the exact vacancy... Etc..even I got 166 ...its not IBPS its the bank who r playing they know people will leave after Po result so y to recruit early.....its a process which is hard to systemize.... And I feel I don't have to tell u what to do to get a vacant place...

    Gud luk

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  62. Ok lets hope that it is true..........Sir,kindly i want to know;wat is today's status for it ...

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  63. Great work Ramandeep Sir. No other sources claimed anything about it.

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  64. YES AS I EXPECTED.......

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  65. Reserve list for PO and clerk released now.. PO-4 final results will be released tomorrow

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  66. Too arrog@@@ ......YES U R R8.......INNOCENT IBPS.......INTELLIGENT ASPIRANTS.....FINALLY....
    INNOCENT+INTELLIGENT=SCAPE GOAT.........

    ReplyDelete
  67. Fingers crossed for tomorrow...getting too nervous...all the best to u and me too

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  68. All the very best.. :) u will get selected for sure :) inform me after ur result...

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  69. Is it applicable with SO too ?

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  70. sir can you please suggest how to clear NICL ASSISTANT exam as only 10 days remaining for exam..please atleast give notes/pdf for computer knowledge section.

    ReplyDelete
  71. Anup Sankar BhattacharyaApril 1, 2015 at 2:23 AM

    JUDGEMENT OF TWO WRIT PETITIONS CAN NOT BE CLUBBED BY THE JUDGE. HEARING TOOK PLSCE ON 26,3,15 AND JUDGEMENT IS DATED 25.3.15. RECORD IS TO BE PRPOERLY VERIFIED, SEEMS TO BE NOT GENUINE.HOWEVER COURT RECORD IS TO BE SEEN. DISPLSY DOES NOT SAY SO.

    ReplyDelete
  72. Results are out As expected...... Which implies that this post is fake!!!!!!!

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  73. you was right sir ./.

    ReplyDelete

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