Scheme of FERA and FEMA

FERA had 81 sections (some of which were deleted by 1993 amendment), out of which 32 sections related to operational part and the balance dealt with Penalties, Enforcement Directorate, etc. FEMA has only 49 sections divided into seven chapters. First 3 chapters containing 12 sections relate to operational part and the balance 4 chapters containing 37 sections deal with Penalties, Adjudication, Appeals, Enforcement Directorate, etc.   Major salient features of FEMA are discussed in the following paragraphs.

Power to make rules
Section 46 of FEMA empowers the Central Government , by notification, to make rules to carry out the provisions of the Act. Such rules may provide for:

·         imposition of reasonable restrictions on current account transactions u/s 5;

·         manner in which the contravention may be compounded u/s 15(I);

·         manner of holding an inquiry by the Adjudicating Authority u/s 16(I);

·         form of appeal and fee for filing such appeal u/s 17 and 19;

·         salary and allowances payable to and other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal and the Special Director (Appeals) u/s 23;

·         salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and the office of the Special Director (Appeals) under section 27(3); 

·         additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of a civil court under clause(i) of subsection 2 of section 28;

·         authority or person and the manner in which any document may be authenticated u/s 39(ii); and

•  any other matter which is required to be or may be prescribed.

Power to make regulations

Section 47 of FEMA empowers the Reserve Bank, by notification, to make regulations to carry out the provisions of this Act and the rules thereunder. Such regulations may provide for:

·         permissible classes of capital account transactions, limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of certain capital account transactions u/s 6;

·         manner and form in which declaration is to be furnished u/s 7 (I)(a);

·         period within which and the manner of repatriation of foreign exchange u/s 8;

·         limit up to which any person may possess foreign currency or foreign coins u/s 9(a);

·         class of persons and limit up to which foreign currency account may be held or operated u/s 9(b);

·         limit up to which foreign exchange acquired may be exempted u/s 9(d);

·         limit up to which foreign exchange acquired may be retained u/s 9(e);

• any other matter which is required to be or may be specified.

The Central Government and Reserve Bank have, by various notifications, issued rules and regulations. A summary of these rules and regulations may be seen in Annexure A.