Foreign Exchange Management Act, 1999:
ED Raids on Soros-Linked Entities for FEMA Violations.
- The Foreign Exchange Management Act (FEMA), 1999, came into force on June 1, 2000, replacing the Foreign Exchange Regulation Act (FERA), 1973.
- The act was introduced in the backdrop of India’s economic liberalization to facilitate external trade and payments and ensure the orderly development of the foreign exchange market.
- Objectives of FEMA:
- Regulation & Management of Foreign Exchange: FEMA governs all aspects of foreign exchange transactions in India, including:
- Acquisition & Holding of foreign exchange
- Payment & Settlement of foreign exchange transactions
- Export & Import of currency.
- Unlike FERA, which was restrictive and criminalized violations, FEMA is more transparent and promotes globalization.
- The Reserve Bank of India (RBI) is the key authority under FEMA.
- The RBI can frame rules, issue guidelines, and regulate foreign exchange transactions.
- Violations under FEMA are civil offences (unlike FERA, where they were treated as criminal offences).
