06-09-2017, 09:51 AM
The 1999 Foreign Exchange Management Act (FEMA) is a law of the Indian Parliament "to consolidate and amend the foreign exchange law with the aim of facilitating foreign trade and payments and to promote orderly development and market maintenance of Currency In India ". It was approved in the winter session of the Parliament in 1999, replacing the Law of Regulation of Changes (FERA). This law typifies offenses related to civilian foreign currency offenses. It extends to all of India, replacing the FERA, which had become incompatible with the liberalization policies of the Government of India. It allowed a new currency management regime compatible with the emerging framework of the World Trade Organization (WTO). It also paved the way for the introduction of the Money Laundering Prevention Act of 2002, which entered into force on 1 July 2005.
Unlike other laws where everything is permitted unless specifically prohibited, under the 1973 Foreign Currency Regulation Act (FEMA predecessor) everything was prohibited unless specifically permitted. Hence the tenor and tone of the Law were very drastic. It required imprisonment even for misdemeanors. Under FERA, a person was presumed guilty unless proven innocent, while under other laws a person is presumed innocent unless proven guilty.
FEMA is a regulatory mechanism that allows the Reserve Bank of India to approve the regulations and the Central Government to approve the standards relating to foreign exchange in line with the foreign trade policy of India.
Unlike other laws where everything is permitted unless specifically prohibited, under the 1973 Foreign Currency Regulation Act (FEMA predecessor) everything was prohibited unless specifically permitted. Hence the tenor and tone of the Law were very drastic. It required imprisonment even for misdemeanors. Under FERA, a person was presumed guilty unless proven innocent, while under other laws a person is presumed innocent unless proven guilty.
FEMA is a regulatory mechanism that allows the Reserve Bank of India to approve the regulations and the Central Government to approve the standards relating to foreign exchange in line with the foreign trade policy of India.