FERA

FOREIGN EXCHANGE
REGULATION ACT
• The Foreign Exchange Regulation Act (FERA) was
legislation passed by the Indian Parliament in
1973 by the government of Indira Gandhi.
• FERA imposed stringent regulations on certain
kinds of payments, the dealings in foreign
exchange and securities and the transactions
which had an indirect impact on the foreign
exchange and the import and export of currency.
• FERA was repealed in 2000 by the government
of Atal Bihari Vajpayee and replaced by the
Foreign Exchange Management Act, which
liberalised foreign exchange controls and
restrictions on foreign investment.
 OBJECTIVES OF FERA
• To regulate certain payments
• To regulate dealings in foreign exchange and
securities
• To regulate the transactions indirectly affecting
foreign exchange
• To regulate import and export of currency
• To conserve the foreign exchange resources of
the country and to utilize the same in the
interests of economic development of the
country
 CONTD
• To regulate holding of immovable property
outside India
• To regulate employment of foreign nationals
• To regulate acquisition, holding, etc. of
immovable property in india by non-residents
• To regulate foreign companies
This act applies to whole of india, to citizens of
india outside india and to branches and agencies
outside india of companies or corporate bodies
registered in india.
 PROVISIONS OF FERA ACT
A) Regulation of dealings in foreign exchange
B) Restrictions regarding assets held by non
residents and import and export of certain
currency and bullion
C) Duty of persons entitled to receive foreign
exchange and payments for exported goods
1) Persons entitled receive foreign exchange
2) Restrictions on export of goods
 CONTD
D) Restrictions on appointment of certain
persons and companies as agents or technical
or management advisers in india
E) Restrictions on establishment of place of
business in india
F) Prior permission of reserve bank required for
taking up employment in india by nationals of
foreign state
G) Restrictions on immovable property
 CONTD
H) Restrictions on payments
Section 8 of act lays down restrictions on certain payments. It
provides that unless authorized by the reserve bank of
India, no person in India shall:
1) Make any payment to or for the credit of any person
resident outside India
2) Receive, otherwise than through an authorized dealer, any
payment by order or on behalf of any person resident
outside India
3) Draw, issue or negotiate any bills of exchange or
promissory note or acknowledge any debt so that a right ,
actual or contingent, to receive a payment is created or
transferred in favor of a person resident outside India.
 CONTD
4) Make any payment to or for the credit of any person
by order or on behalf of any person resident outside
India.
5) Place any sum to the credit of any person resident
outside India
6)draw, issue or negotiate any bill of exchange or
promissory note, transfer any security or acknowledge
any debt, so that a right, actual or contingent, to
receive a payment is credited or transferred in favor of
any person as consideration for or in association with
any matter.
 CONTD
7) Make any payment to or for the credit of any
person or receive any payment for or by order
or on behalf of any person as consideration
for or in association with the receipt by any
person of a payment or the acquisition by any
person of property outside India and the
creation and transfer in favor of any person
any right, actual or contingent, to receive
payment or acquire property outside India.