The Foreign Exchange Management Act, 1999 (FEMA), as mentioned earlier, has been in force with effect from 1.6.2000, thus replacing the old FERA, 1973. There is a general misunderstanding among the NRIs that all restrictions and controls relating to foreign exchange transactions have been abolished and that foreign exchange dealings would be allowed to be freely made after the enactment of FEMA. This is not so. It is, of course, true that there is a great change in the outlook of FEMA in comparison with FERA but reasonable restrictions with regard to foreign exchange transactions with a view to facilitate them in a regulated manner find a place in FEMA, 1999 and connected rules and regulations. One of the special aspects of FEMA is that various notifications and provisions of the RBI Exchange Control Manual have been reframed in the form of separate regulations for different types of exchange transactions with a view to making them available easily to NRJs and other persons and also to provide transparency to the RBI rules and regulations. For example, the various types of accounts like NR(E) Account, FCNR account, NRO Account, etc. were regulated through Exchange Control Manual and Notifications in this regard. Now, the FEMA (Deposit) Regulations deal with the maintenance and operation of such accounts in a clear cut manner. Similar is the case with reference to other various aspects of foreign exchange. The main change that the FEMA has brought in is that FEMA is a civil law, whereas the FERA was a criminal law. Under the FEMA no prosecution would be launched for contravention of operating provisions, likewise, arrest and imprisonment would not be resorted to except in the solitary case where the person, alleged to have contravened the provisions of the FEMA, defiantly resolves not to pay the penalty imposed under Section 13 of the FEMA. In the same manner unrestrained enormous powers of Directorate of Enforcement have been slashed down to a considerable extent. Even the word “offence” is conspicuous by its absence in the substantive provisions of FEMA. There are 49 sections in all in FEMA. Of these, only seven sections, namely, Sections 3 to 9 deal with certain acts to be done or not to be done in connection with transactions involving foreign exchange, foreign security, etc. There are various sections from 16 to 35 relating only to adjudication and appeal. Further, one of the most important and distinguishing features of FEMA is that there is a provision for compounding of penalty as contained in Section 15 of FEMA. This could not have been imagined earlier under FERA. Thus, NRIs and residents will have much easier time under FEMA. |
