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c c 



 c  c 
   On regulation of foreign On management of foreign
exchange exchange
  
Foreign exchange reserves With the improvement in
positions was not foreign exchange reserves
satisfactory for that stringent such stringent controls are
controls were required on the not required now.
use of foreign exchange
  
Need to take permission of No need for seeking the
RBI in connection with permission of RBI in
remittances involving connection with
external trade remittances involving
external trade except
section3 relates to dealing
in foreign exchange
  
 These restrictions on drawals Section 5, it removes all
of foreign exchange for the the restrictions on drawals
purpose current account of foreign exchange for
transactions the papoose of current
account transactions
 


 Violations of FERA was Violations of FEMA
 treated as criminal offence treated as civil offence
and burden of proof was on removes the threat of
the guilty imprisonment compared
their illegal acts by paying
a fine (not too high)

The       c  !c  are:

1. The RBI and central government would continue to be the regulatory bodies.
2. Presumption of extra territorial jurisdiction as envisaged in section (1) of FERA has been
retained.
3. The Directorate of Enforcement continues to be the agency for enforcement of the
provisions of the law such as conducting search and seizure.

The "
!   are between the two are:

1. FERA consists of 81 complex sections, while FEMA has only 49 which are relatively
simpler.
2. Some terms like Capital Account Transaction, current Account Transaction, person,
service etc were not defined at all in FERA while they have been defined in detail in
FEMA.
3. Definition of ³Authorized person´ as per FERA was limited while in FEMA it has been
extended to include banks, money changes, off shore banking Units etc.
4. While defining ³Resident´, FERA and Income Tax Act differed a lot. In FEMA, the term
has been defined in accordance with the act.
5. Under FERA, any offence was a criminal one which included imprisonment as per code
of criminal procedure, 1973. Under FEMA, offence is treated as civil offence. A penalty
has to be paid in terms of money and imprisonment is only for those people who do not
pay the penalty.
6. The amount of money paid as penalty was quite large in FERA. It was five times the
amount involved. In FEMA, the amount has been considerably reduced to three times the
amount involved.
7. Any appeal against the order of "Adjudicating office", before Foreign Exchange
Regulation Appellate Board went before High Court. The appellate authority under
FEMA is the special Director (Appeals). Appeal against the order of Adjudicating
Authorities and special Director (appeals) lies before "Appellate Tribunal for Foreign
Exchange´. An appeal from an order of Appellate Tribunal would lie to the High Court.
8. FERA does not have any provision for the complainant to take any legal help whereas
FEMA clearly recognizes the right of the complainant to take help from a lawyer or a
chartered accountant.
9. With FERA, police officers (Deputy Superintendent of Police and above rank officers)
were granted extensive powers of search and seizure while FEMA has restricted the
power to a great extent.

The most important changes made from FERA to FEMA were regarding the laws which deal
with restrictions on withdrawals and transactions of foreign exchange. Most of them have been
removed. Yet, it may be noted that the Central Government (with consultation with RBI) can still
enforce restrictions on these transactions in public interest.

The main aim of FEMA is to 



 !#
$% in India. It helps all
concerned people to make the financial transactions smoothly.

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