Taxmann's Foreign Exchange Management Manual

I-5 CONTENTS
PAGE
DIVISION HEADS
PAGE
Contents I-7-I-19
List of Basic Notifications I-21-I-28
List of Amending Notifications I-29-I-48
List of Notifications I-49-I-90
List of Master Directions I-91-I-92
List of FDI Circulars and Press Notes I-93
List of Prescribed Forms I-95-I-100
DIVISION ONE
u FEMA Glossary 1.1-1.35
DIVISION TWO
u Foreign Exchange Management Act, 1999 2.1-2.29
DIVISION THREE
u Rules & Regulations under FEMA 3.1-3.292
DIVISION FOUR
u Notifications under FEMA 4.1-4.23
DIVISION FIVE
u Master Directions 5.1-5.411
DIVISION SIX
u Memorandum of Instructions 6.1-6.96
DIVISION SEVEN
u Foreign Contributions 7.1-7.151
DIVISION EIGHT
u Prevention of Money Laundering 8.1-8.216
DIVISION NINE
u EURO Issue and Issue of Foreign Currency Convertible Bonds/Ordinary
Shares through Depository Receipt Mechanism/Issue of Foreign
Currency Exchange Bonds 9.1-9.57
I-5

CONTENTS I-6
PAGE
DIVISION HEADS
DIVISION TEN
u Allied Acts/Rules & Guidelines 10.1-10.83
DIVISION ELEVEN
u Foreign Direct Investment Policy 11.1-11.114
DIVISION TWELVE
u Tribunal, Appellate Tribunal and other Authorities 12.1-12.24
DIVISION THIRTEEN
u FEMA & FDI Ready Reckoner 13.1-13.525*
DIVISION FOURTEEN
u FEMA Case Laws Digest 14.1-14.130*
DIVISION FIFTEEN
u RBI’s Circulars & Clarifications 15.1-15.480*
APPENDIX I
u Relevant Provisions of Exchange Control Manual A1-A101*
APPENDIX II
u Foreign Exchange Regulation Act, 1973 A103-A135*
APPENDIX III
u FEDAI Rules A137-A155*
APPENDIX IV
u Asian Clearing Union (Procedure) Rules A157-A161*
SUBJECT INDEX i-l
*See Volume 2.

I-7 CONTENTS
PAGE
CONTENTS
PAGE
Division Heads I-5-I-6
List of Basic Notifications I-21-I-28
List of Amending Notifications I-29-I-48
List of Notifications I-49-I-90
List of Master Directions I-91-I-92
List of FDI Circulars and Press Notes I-93
List of Prescribed Forms I-95-I-100
DIVISION ONE
FEMA GLOSSARY
1.1 Glossary of Important Definitions 1.3
DIVISION TWO
FOREIGN EXCHANGE MANAGEMENT ACT, 1999
CHAPTER I
PRELIMINARY
1. Short title, extent, application and commencement 2.3
2. Definitions 2.3
CHAPTER II
REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE
3. Dealing in foreign exchange, etc. 2.6
4. Holding of foreign exchange, etc. 2.7
5. Current account transactions 2.7
6. Capital account transactions 2.7
7. Export of goods and services 2.10
8. Realisation and repatriation of foreign exchange 2.10
9. Exemption from realisation and repatriation in certain cases 2.10
I-7

CONTENTS I-8
PAGE
CHAPTER III
AUTHORISED PERSON
10. Authorised person 2.11
11. Reserve Bank’s powers to issue directions to authorised person 2.12
12. Power of Reserve Bank to inspect authorised person 2.12
CHAPTER IV
CONTRAVENTION AND PENALTIES
13. Penalties 2.13
14. Enforcement of the orders of Adjudicating Authority 2.14
14A. Power to recover arrears of penalty 2.15
15. Power to compound contravention 2.15
CHAPTER V
ADJUDICATION AND APPEAL
16. Appointment of Adjudicating Authority 2.15
17. Appeal to Special Director (Appeals) 2.16
18. Appellate Tribunal 2.17
19. Appeal to Appellate Tribunal 2.17
20. [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] 2.18
21. Qualifications for appointment of Special Director (Appeals) 2.18
23. Terms and conditions of service of Special Director (Appeals) 2.19
27. Staff of Special Director (Appeals) 2.20
28. Procedure and powers of Appellate Tribunal and Special
Director (Appeals) 2.20
32. Right of appellant to take assistance of legal practitioner or
chartered accountant and of Government, to appoint
presenting officers 2.21
33. Officers and employees, etc., to be public servant 2.21
34. Civil court not to have jurisdiction 2.21
35. Appeal to High Court 2.22
CHAPTER VI
DIRECTORATE OF ENFORCEMENT
36. Directorate of Enforcement 2.22
37. Power of search, seizure, etc. 2.22

I-9 CONTENTS
PAGE
37A. Special provisions relating to assets held outside India in contravention of section 4 2.23
38. Empowering other officers 2.23
CHAPTER VII
MISCELLANEOUS
39. Presumption as to documents in certain cases 2.24
40. Suspension of operation of this Act 2.24
41. Power of Central Government to give directions 2.25
42. Contravention by companies 2.25
43. Death or insolvency in certain cases 2.25
44. Bar of legal proceedings 2.25
44A. Powers of Reserve Bank not to apply to International Financial Services Centre 2.25
45. Removal of difficulties 2.26
46. Power to make rules 2.26
47. Power to make regulations 2.27
48. Rules and regulations to be laid before Parliament 2.28
49. Repeal and saving 2.28
DIVISION THREE
RULES & REGULATIONS UNDER FEMA
LIST OF RULES AND REGULATIONS
3.1 Foreign Exchange Management (Encashment of Draft, Cheque,
Instrument and Payment of Interest) Rules, 2000 3.3
3.2 Foreign Exchange (Authentication of Documents) Rules, 2000 3.5
3.3 Foreign Exchange Management (Current Account Transactions)
Rules, 2000 3.6
3.4 Foreign Exchange Management (Adjudication Proceedings and Appeal)
Rules, 2000 3.11
3.5 Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
3.6 Foreign Exchange Management (Permissible Capital Account
Transactions) Regulations, 2000 3.22
3.7 Foreign Exchange Management (Issue of Security in India by a Branch,
Office or Agency of a Person Resident outside India) Regulations, 2000 3.26
3.8 Foreign Exchange Management (Borrowing and Lending) Regulations,
2018 3.27
3.9 Foreign Exchange Management (Deposit) Regulations, 2016 3.37
3.10 Foreign Exchange Management (Export and Import of Currency)
Regulations, 2015 3.55
3.11 Foreign Exchange Management (Acquisition and Transfer of Immovable
Property outside India) Regulations, 2015 3.58
3.12 Foreign Exchange Management (Guarantees) Regulations, 2000 3.60
3.13 Foreign Exchange Management (Realisation, Repatriation and Surrender
of Foreign Exchange) Regulations, 2015 3.65

CONTENTS I-10
PAGE
3.14 Foreign Exchange Management (Foreign Currency Accounts by a Person
Resident in India) Regulations, 2015 3.68
3.15 Foreign Exchange Management (Possession and Retention of Foreign
Currency) Regulations, 2015 3.79
3.16 Foreign Exchange Management (Insurance) Regulations, 2015 3.81
3.17 Foreign Exchange Management (Remittance of Assets) Regulations, 2016 3.83
3.18 Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 3.87
3.19 Foreign Exchange Management (Non-debt Instruments) Rules, 2019 3.93
3.20 Foreign Exchange Management (Debt Instruments) Regulations, 2019 3.154
3.21 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt
Instruments) Regulations, 2019 3.160
3.22 Foreign Exchange Management (Establishment in India of a Branch Office or a
Liaison Office or a Project Office or any other Place of Business) Regulations, 2016 3.167
3.23 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 3.178
3.24 Foreign Exchange Management (Foreign Exchange Derivative Contracts)
3.25 Currency Futures (Reserve Bank) Directions, 2008 3.193
3.26 Foreign Exchange Management (Transfer or Issue of any Foreign Security)
3.27 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances &
Other Conditions of Service of Chairperson & Members) Rules, 2000 3.262
3.28 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 3.265
3.29 Foreign Exchange Management [Withdrawal of General Permission
to Overseas Corporate Bodies (OCBs)] Regulations, 2003 3.267
3.30 Exchange Traded Currency Options (Reserve Bank) Directions, 2010 3.271
3.31 Foreign Exchange Management (Crystallization of Inoperative Foreign Currency
Deposits) Regulations, 2014 3.275
3.32 Foreign Exchange Management (International Financial Services Centre)
3.33 Foreign Exchange Management (Regularization of Assets held Abroad by a Person
3.34 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 3.280
3.35 Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank)
Directions, 2018 3.284
3.36 Currency Futures in International Financial Services Centre (Reserve Bank) Directions,
2020 3.287
3.37 Currency Options in International Financial Services Centre (Reserve Bank) Directions,
2020 3.289
3.38 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 3.291
ALPHABETICAL LIST OF RULES & REGULATIONS
u Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances &
Other Conditions of Service of Chairperson & Members) Rules, 2000 3.262
u Currency Futures (Reserve Bank) Directions, 2008 3.193
u Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 3.287
u Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 3.289
u Exchange Traded Currency Options (Reserve Bank) Directions, 2010 3.271

I-11 CONTENTS
PAGE
u Foreign Exchange (Authentication of Documents) Rules, 2000 3.5
u Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
u Foreign Exchange Management (Acquisition and Transfer of Immovable Property
outside India) Regulations, 2015 3.58
u Foreign Exchange Management (Adjudication Proceedings and Appeal)
Rules, 2000 3.11
u Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 3.27
u Foreign Exchange Management (Cross Border Merger) Regulations, 2018 3.280
u Foreign Exchange Management (Crystallization of Inoperative Foreign Currency
Deposits) Regulations, 2014 3.275
u Foreign Exchange Management (Current Account Transactions) Rules, 2000 3.6
u Foreign Exchange Management (Debt Instruments) Regulations, 2019 3.154
u Foreign Exchange Management (Deposit) Regulations, 2016 3.37
u Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and
Payment of Interest) Rules, 2000 3.3
u Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison
Office or a Project Office or any other Place of Business) Regulations, 2016 3.167
u Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 3.55
u Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 3.178
u Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in
India) Regulations, 2015 3.68
u Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 3.185
u Foreign Exchange Management (Guarantees) Regulations, 2000 3.60
u Foreign Exchange Management (Insurance) Regulations, 2015 3.81
u Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 3.277
u Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency
of a Person Resident outside India) Regulations, 2000 3.26
u Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 3.87
u Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 3.291
u Foreign Exchange Management (Mode of Payment and Reporting of Non-debt
Instruments) Regulations, 2019 3.160
u Foreign Exchange Management (Non-debt Instruments) Rules, 2019 3.93
u Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 3.265
u Foreign Exchange Management (Permissible Capital Account Transactions) Regulations,
2000 3.22
u Foreign Exchange Management (Possession and Retention of Foreign Currency)
u Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign
Exchange) Regulations, 2015 3.65
u Foreign Exchange Management (Regularization of Assets held Abroad by a Person
u Foreign Exchange Management (Remittance of Assets) Regulations, 2016 3.83
u Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 3.197

CONTENTS I-12
PAGE
u Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate
Bodies (OCBs)] Regulations, 2003 3.267
u Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank)
Directions, 2018 3.284
CHRONOLOGICAL LIST OF RULES & REGULATIONS
CENTRAL GOVERNMENT
u GSR 379(E), dated 3-5-2000 - Foreign Exchange Management (Encashment of Draft,
Cheque, Instrument and Payment of Interest) Rules, 2000 3.3
u GSR 380(E), dated 3-5-2000 - Foreign Exchange (Authentication of Documents)
Rules, 2000 3.5
u GSR 381(E), dated 3-5-2000 - Foreign Exchange Management (Current Account
Transactions) Rules, 2000 3.6
u GSR 382(E), dated 3-5-2000 - Foreign Exchange Management (Adjudication Proceedings
and Appeal) Rules, 2000 3.11
u GSR 383(E), dated 3-5-2000 - Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
u GSR 677(E), dated 28-8-2000 - Appellate Tribunal for Foreign Exchange (Recruitment,
Salary and Allowances and other Conditions of Service of Chairperson and Members)
Rules, 2000 3.262
u S.O. No. 3732(E), dated 17-10-2019 - Foreign Exchange Management (Non-debt
Instruments) Rules, 2019 3.93
u GSR 796(E), dated 17-10-2019 - Foreign Exchange Management (Debt Instruments)
RBI
u FEMA 1/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Permissible
Capital Account Transactions) Regulations, 2000 3.22
u FEMA 2/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Issue of Security in
India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 3.26
u FEMA 3(R)/2018-RB, dated 17-12-2018 - Foreign Exchange Management (Borrowing and
Lending) Regulations, 2018 3.27
u FEMA 5(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Deposit)
u FEMA 6(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Export and Import
of Currency) Regulations, 2015 3.55
u FEMA 7(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Acquisition and
Transfer of Immovable Property outside India) Regulations, 2015 3.58
u FEMA 8/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Guarantees)
u FEMA 9(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Realisation,
Repatriation and Surrender of Foreign Exchange) Regulations, 2015 3.65
u FEMA 10(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Foreign Currency
Accounts by a Person Resident in India) Regulations, 2015 3.68
u FEMA 10A/2014-RB, dated 21-3-2014 - Foreign Exchange Management (Crystallization of
Inoperative Foreign Currency Deposits) Regulations, 2014 3.275
u FEMA 11(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Possession and
Retention of Foreign Currency) Regulations, 2015 3.79

I-13 CONTENTS
PAGE
u FEMA 12(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Insurance)
u FEMA 13(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Remittance of
Assets) Regulations, 2016 3.83
u FEMA 14(R)/2016-RB, dated 2-5-2016 - Foreign Exchange Management (Manner of Receipt
and Payment) Regulations, 2016 3.87
u FEMA 22(R)/2016-RB, dated 31-3-2016 - Foreign Exchange Management (Establishment in
India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business)
u FEMA 23(R)/2015-RB, dated 12-1-2016 - Foreign Exchange Management (Export of Goods
and Services) Regulations, 2015 3.178
u FEMA 25/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Foreign Exchange
Derivative Contracts) Regulations, 2000 3.185
u FEMA 120/2004-RB, dated 7-7-2004 - Foreign Exchange Management (Transfer or Issue
of any Foreign Security) Regulations, 2004 3.197
u FEMA 71/2002-RB, dated 7-9-2002 - Foreign Exchange Management (Offshore Banking
Unit) Regulations, 2002 3.265
u FEMA 101/2003-RB, dated 3-10-2003 - Foreign Exchange Management [Withdrawal
of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 3.267
u FEMA 339/2015-RB, dated 2-3-2015 - Foreign Exchange Management (International
Financial Services Centre) Regulations, 2015 3.277
u FEMA 348/2015-RB, dated 25-9-2015 - Foreign Exchange Management (Regularization
of Assets held Abroad by a Person Resident in India) Regulations, 2015 3.279
u FEMA 389/2018-RB, dated 20-3-2018 - Foreign Exchange Management (Cross Border
Merger) Regulations, 2018 3.280
u FEMA 395/2019-RB, dated 17-10-2019 - Foreign Exchange Management (Mode of
Payment and Reporting of Non-debt Instruments) Regulations, 2019 3.160
u FEMA 399/2020-RB, dated 23-10-2020 - Foreign Exchange Management (Margin for
Derivative Contracts) Regulations, 2020 3.291
u FED 1/DG(SG)-2008, dated 6-8-2008 - Currency Futures (Reserve Bank) Directions, 2008 3.193
u FED 01/ED(HRK)-2010, dated 30-7-2010 - Exchange Traded Currency Options
(Reserve Bank) Directions, 2010 3.271
u FMRD.FMD.01/ED(TRS)-2020, dated 20-1-2020 - Currency Futures in International
Financial Services Centre (Reserve Bank) Directions, 2020 3.287
u FMRD.FMD.02/ED(TRS)-2020, dated 20-1-2020 - Currency Options in International
Financial Services Centre (Reserve Bank) Directions, 2020 3.289
DIVISION FOUR
NOTIFICATIONS UNDER FEMA
4.1 Notification under section 1(4) of FEMA/Enforcement of Amendments to provisions
of FEMA 4.3
4.2 Notification under section 2(h) of FEMA 4.4
4.3 Notification under section 2(za) of FEMA 4.5
4.4 Notifications under section 3 of FEMA 4.6

CONTENTS I-14
PAGE
4.5 Notification under section 6 of FEMA 4.9
4.6 Orders under section 16 of FEMA 4.10
4.10 Notifications under section 36 of FEMA 4.15
4.11 Notifications under section 37A of FEMA 4.17
4.13 Notification under section 40 of RBI Act 4.19
4.16 Removal of Difficulties Order 4.23
DIVISION FIVE
MASTER DIRECTIONS
5.1 Master Direction on Risk Management and Inter-Bank Dealings 5.3
5.2 Master Direction on Opening and Maintenance of Rupee/Foreign Currency Vostro
Accounts of Non-resident Exchange Houses 5.29
5.3 Master Direction on Money Changing Activities 5.39
5.4 Master Direction on Compounding of Contraventions under FEMA, 1999 5.57
5.5 Master Direction on External Commercial Borrowings, Trade Credits and structured
obligations 5.67
5.6 Master Direction on Borrowing and Lending transactions in Indian Rupee between
Persons Resident in India and Non-Resident Indians/Persons of Indian Origin 5.86
5.7 Master Direction on Liberalised Remittance Scheme (LRS) 5.93
5.8 Master Direction on other Remittance Facilities 5.107
5.9 Master Direction on Insurance 5.131
5.10 Master Direction on Establishment of Branch Office (BO)/Liaison Office (LO)/Project
Office (PO) or any other place of business in India by foreign entities 5.138
5.11 Master Direction on Foreign Investment in India 5.152
5.12 Master Direction on Acquisition and Transfer of Immovable Property under Foreign
Exchange Management Act, 1999 5.188
5.13 Master Direction on Remittance of Assets 5.199
5.14 Master Direction on Deposits and Accounts 5.203
5.15 Master Direction on Direct Investment by Residents in Joint Venture (JV)/Wholly
Owned Subsidiary (WOS) Abroad 5.222
5.16 Master Direction on Export of Goods and Services 5.246
5.17 Master Direction on Import of Goods and Services 5.277
5.18 Master Direction on Reporting under Foreign Exchange Management Act, 1999 5.300
5.19 Master Direction on Miscellaneous 5.397
5.20 Master Direction on Money Transfer Service Scheme (MTSS) 5.403

I-15 CONTENTS
PAGE
DIVISION SIX
MEMORANDUM OF INSTRUCTIONS
u PEM : Memorandum of Instructions on Project Exports and Service Exports 6.3
u ACM : Memorandum of procedure for channelling transactions through
Asian Clearing Union (ACU) 6.68
u GIM : Revised Instructions under GIM 6.89
u LIM : Revised Instructions under LIM 6.94
DIVISION SEVEN
FOREIGN CONTRIBUTIONS
7.1 Foreign Contribution (Regulation) Act, 2010 7.3
7.2 Foreign Contribution (Regulation) Rules, 2011 7.26
7.3 Foreign Contribution (Acceptance or Retention of Gifts or Presentations) Rules, 2012 7.67
7.4 Notifications issued under Foreign Contribution (Regulation) Act, 2010 7.69
7.5 Guidelines issued under section 36(1)(a) of the Banking Regulation Act, 1949 -
Implementation of the Provisions of Foreign Contribution (Regulation) Act, 2010 7.78
7.6 Guidelines for consideration of proposals for acceptance of foreign hospitality
under the Foreign Contribution (Regulation) Act, 2010 7.84
7.7 Exemption from provisions of section 14(3) of Foreign Contribution (Regulation) Act,
2010 7.89
7.8 Procedure for opening & operating the designated “FCRA Account” as provided under
the amended Section 17(1) of the Foreign Contribution (Regulation) Act, 2010 7.90
7.9 Notified agencies not to be covered by definition of ‘Foreign Sources’ 7.92
7.10 Standard Operating Procedure (SOP) to open and operate the “FCRA Account” as
provided under Section 17(1) of the amended Foreign Contribution (Regulation) Act,
2010 with SBI, New Delhi Main Branch in terms of FCRA (Amendment) Act, 2020 7.97
7.11 Advisory for Compliance by FCRA NGOs/Associations with the Amended Provisions in
FCRA, 2010 and FCRR, 2011 7.100
7.12 FAQs on FCRA, 2010 7.103
7.13 Case Laws Digest 7.122
DIVISION EIGHT
PREVENTION OF MONEY LAUNDERING
8.1 Prevention of Money Laundering Act, 2002 8.3
8.2 Notifications 8.57
8.3 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of
ProvisionalAttachmentofPropertyalongwiththeMaterial,andCopyoftheReasonsalong
with the Material in Respect of Survey, to the Adjudicating Authority and its Period of
Retention) Rules, 2005 8.77
8.4 Prevention of Money-Laundering (Receipt and Management of Confiscated Properties)
Rules, 2005 8.82
8.5 Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 8.85

CONTENTS I-16
PAGE
8.6 Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the
Manner of Forwarding the Reasons and Material to the Adjudicating Authority,
Impounding and Custody of Records and the Period of Retention) Rules, 2005 8.116
8.7 Prevention of Money-Laundering (the Forms and the Manner of Forwarding a Copy of
Order of Arrest of a Person along with the Material to the Adjudicating Authority and
its Period of Retention) Rules, 2005 8.127
8.8 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of
Retention of Seized Property along with the Material to the Adjudicating Authority and the
Period of its Retention) Rules, 2005 8.132
8.9 Prevention of Money-Laundering (Manner of Receiving the Records Authenticated
outside India) Rules, 2005 8.136
8.10 Prevention of Money-Laundering (Appeal) Rules, 2005 8.137
8.11 Adjudicating Authority (Procedure) Regulations, 2013 8.140
8.12 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson
and Members of Appellate Tribunal) Rules, 2007 8.154
8.13 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson
and Members of Adjudicating Authorities) Rules, 2007 8.160
8.14 Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013 8.163
8.15 Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties
Confirmed by the Adjudicating Authority) Rules, 2013 8.165
8.16 Prevention of Money-Laundering (Restoration of Property) Rules, 2016 8.171
8.17 Know Your Customer (KYC) Directions, 2016 8.173
DIVISION NINE
EURO ISSUE AND ISSUE OF FOREIGN CURRENCY CONVERTIBLE
BONDS/ORDINARY SHARES THROUGH DEPOSITORY RECEIPT
MECHANISM/ISSUE OF FOREIGN CURRENCY EXCHANGE BONDS
9.1 Euro Issue 9.3
9.2 Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depositary Receipt Mechanism) Scheme, 1993 9.33
9.3 Issue of Foreign Currency Exchangeable Bonds Scheme, 2008 9.49
9.4 Depository Receipts Scheme, 2014 9.52
9.5 Companies (Issue of Global Depository Receipts) Rules, 2014 9.56
DIVISION TEN
ALLIED ACTS/RULES AND GUIDELINES
10.1 Foreign Trade (Development and Regulation) Act, 1992 10.3
10.2 Notification under section 9A of the Foreign Trade (Development & Regulation) Act,
1992 10.18
10.3 Foreign Trade (Regulation) Rules, 1993 10.20
10.4 Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 10.28
10.5 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 10.33

I-17 CONTENTS
PAGE
10.6 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 10.40
10.7 Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for
Forfeited Property) Rules, 1977 10.51
10.8 Appellate Tribunal for Forfeited Property (Procedure) Rules, 1986 10.60
10.9 Appellate Tribunal for Forfeited Property (Fees) Rules, 1987 10.68
10.10 Smugglers and Foreign Exchange Manipulators (Receipt, Management and Disposal
of Forfeited Property) Rules, 2006 10.69
10.11 Safeguard Measures (Quantitative Restrictions) Rules, 2012 10.75
DIVISION ELEVEN
FOREIGN DIRECT INVESTMENT POLICY
11.1 Consolidated Foreign Direct Investment Policy 11.3
11.2 Circulars issued in 2017-21 11.71
DIVISION TWELVE
TRIBUNAL, APPELLATE TRIBUNAL AND OTHER AUTHORITIES
12.1 Relevant sections of Finance Act, 2017 12.3
12.2 Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and
Other Conditions of Service of Members) Rules, 2020 12.10
DIVISION THIRTEEN
FEMA & FDI READY RECKONER
Acronyms used in FEMA & FDI
CHAPTER 1 : FEMA - Overview 13.v*
CHAPTER 2 : Authorised Person under FEMA 13.10*
CHAPTER 3 : Accounts in India by person resident out of India 13.18*
CHAPTER 4 : Accounts of Indian residents in Foreign Currency 13.31*
CHAPTER 5 : Receipt and payment in foreign exchange 13.42*
CHAPTER 6 : Realisation, repatriation and surrender of foreign exchange 13.47*
CHAPTER 7 : Money Changing Activities 13.50*
CHAPTER 8 : Money Transfer Service Scheme (MTSS) 13.62*
CHAPTER 9 : Possession and Retention of Foreign Currency 13.67*
CHAPTER 10 : Export and Import of Currency or Currency Notes 13.69*
CHAPTER 11 : Remittances on current account 13.73*
CHAPTER 12 : Liberalised Remittance Scheme (LRS) 13.88*
CHAPTER 13 : Export of Goods and Services 13.96*
CHAPTER 14 : Import of Goods and Services 13.135*
CHAPTER 15 : Project exports and service exports 13.157*
CHAPTER 16 : Foreign exchange rates 13.159*
CHAPTER 17 : Overview of capital account transactions 13.166*
CHAPTER 18 : Foreign Investment in India 13.171*
*See Volume 2.

CONTENTS I-18
PAGE
*See Volume 2.
CHAPTER 19 : FDI in Indian company 13.180*
CHAPTER 20 : Sector-wise FDI Policy at a glance 13.201*
CHAPTER 21 : FDI - Downstream investment i.e. indirect investment 13.210*
CHAPTER 22 : FDI through rights, bonus, sweat equity or merger/amalgamation 13.217*
CHAPTER 23 : FDI - Transfer of securities 13.223*
CHAPTER 24 : FDI in LLP 13.238*
CHAPTER 25 : FDI in GDR/ADR 13.241*
CHAPTER 26 : Investment by NRI or OCI 13.247*
CHAPTER 27 : FDI in startup company 13.261*
CHAPTER 28 : Investment by Foreign Portfolio Investor 13.264*
CHAPTER 29 : FDI in investment vehicle 13.271*
CHAPTER 30 : FDI by FVCI 13.274*
CHAPTER 31 : FDI - Investment in securities by Funds, Foreign Central Bank etc. 13.277*
CHAPTER 32 : Investment by Indian entity in JV/WOS abroad 13.279*
CHAPTER 33 : Guarantees 13.308*
CHAPTER 34 : Insurance 13.313*
CHAPTER 35 : Borrowing and Lending in foreign currency 13.321*
CHAPTER 36 : Borrowing and lending in Indian Rupees 13.326*
CHAPTER 37 : Foreign Investment in Debt Instruments 13.333*
CHAPTER 38 : External Commercial Borrowings 13.344*
CHAPTER 39 : Trade Credit (TC) and Structured Obligations 13.360*
CHAPTER 40 : Acquisition and transfer of immovable property in India 13.367*
CHAPTER 41 : Acquisition and transfer of immovable property out of India 13.373*
CHAPTER 42 : Remittance of Assets 13.375*
CHAPTER 43 : Branch/LO/Project Office in India by foreign entities 13.379*
CHAPTER 44 : Indian Depository Receipts 13.395*
CHAPTER 45 : Risk Management and Inter-Bank Dealings 13.402*
CHAPTER 46 : Vostro Account of Non-Resident Exchange Houses 13.405*
CHAPTER 47 : Industrial Policy of Government of India 13.408*
CHAPTER 48 : Enforcement of FEMA 13.414*
CHAPTER 49 : Penalties under FEMA 13.417*
CHAPTER 50 : Appeals under FEMA 13.423*
CHAPTER 51 : Compounding of Contraventions under FEMA 13.427*
CHAPTER 52 : Prevention of Money Laundering Act 13.439*
CHAPTER 53 : Foreign Contribution (Regulation) Act (FCRA) 13.472*
CHAPTER 54 : COFEPOSA, 1974 13.498*
SUBJECT INDEX 13.513*

I-19 CONTENTS
PAGE
DIVISION FOURTEEN
FEMA CASE LAWS DIGEST
14.1 FEMA 1999 14.3*
14.2 Foreign Contribution (Regulation) Act, 1976 14.25*
14.3 Foreign Contribution (Regulation) Act, 2010 14.27*
14.4 Foreign Exchange Regulation Act, 1973 14.29*
DIVISION FIFTEEN
RBI’s CIRCULARS & CLARIFICATIONS
15.1 List of RBI’s Circulars & Clarifications 15.3*
15.2 RBI’s Circulars & Clarifications 15.154*
15.3 Other Circulars & Clarifications 15.244*
APPENDIX I
u Relevant Provisions of Exchange Control Manual A1-A101*
APPENDIX II
u Foreign Exchange Regulation Act, 1973 A103-A135*
APPENDIX III
u FEDAI Rules A137-A155*
APPENDIX IV
u Asian Clearing Union (Procedure) Rules A157-A161*
SUBJECT INDEX i-l
*See Volume 2.

(ii) the holding of realised amount in an account with an authorised person in India to the
extent notified by the Reserve Bank,
and includes use of the realised amount for discharge of a debt or liability denominated in
foreign exchange and the expression “repatriation” shall be construed accordingly;
(z) “Reserve Bank” means the Reserve Bank of India constituted under sub-section (1) of section
3 of the Reserve Bank of India Act, 1934 (2 of 1934);
(za) “security” means shares, stocks, bonds and debentures, Government securities as defined in
the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings
Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities
and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit
Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to
securities, but does not include bills of exchange or promissory notes other than Government
promissory notes or any other instruments which may be notified6
by the Reserve Bank as
security for the purposes of this Act;
(zb) “service” means service of any description which is made available to potential users and
includes the provision of facilities in connection with banking, financing, insurance, medical
assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or
otherenergy,boardingorlodgingorboth,entertainment,amusementorthepurveyingofnews
or other information, but does not include the rendering of any service free of charge or under
a contract of personal service;
(zc) “Special Director (Appeals)” means an officer appointed under 7
[section 17];
(zd) “specify” means to specify by regulations made under this Act and the expression “specified”
shall be construed accordingly;
(ze) “transfer” includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of
transfer of right, title, possession or lien.
CHAPTER II
REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE
Dealing in foreign exchange, etc.8
3. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general
or special permission of the Reserve Bank9
, no person shall—
(a) deal in or transfer any foreign exchange or foreign security to any person not being an
authorised person;
(b) make any payment to or for the credit of any person resident outside India in any manner;
(c) receive otherwise (than)10
through an authorised person, any payment by order or on behalf
of any person resident outside India in any manner;
S. 3 FOREIGN EXCHANGE MANAGEMENT ACT, 1999 2.6
6. See Notification No. FEMA 223/2012-RB, dated 7-3-2012. (See Division Four)
7. Substituted for “section 18” by the Finance Act, 2017, w.e.f. 26-5-2017.
8. See Master Direction : Compounding of contraventions under FEMA, 1999 [No. 4/2015-16, dated 1-1-2016]. (See
Division Five)
9. See Notification Nos. G.S.R. 403(E), 404(E) and 1009(E), dated 29-12-2015. (See Division Four)
10. Word ‘than’ should appear after word ‘otherwise’.

Explanation.—For the purpose of this clause, where any person in, or resident in, India receives
any payment by order or on behalf of any person resident outside India through any other
person (including an authorised person) without a corresponding inward remittance from any
place outside India, then, such person shall be deemed to have received such payment
otherwise than through an authorised person;
(d) enter into any financial transaction in India as consideration for or in association with
acquisition or creation or transfer of a right to acquire, any asset outside India by any person.
Explanation.—For the purpose of this clause, “financial transaction” means making any
payment to, or for the credit of any person, or receiving any payment for, by order or on behalf
of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or
transferring any security or acknowledging any debt.
Holding of foreign exchange, etc.
4. Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess
ortransferanyforeignexchange,foreignsecurityoranyimmovablepropertysituatedoutsideIndia.
Current account transactions.11
5. Any person may sell or draw foreign exchange to or from an authorised person if such sale or
drawal is a current account transaction:
Provided that the Central Government may, in public interest and in consultation with the Reserve
Bank, impose such reasonable restrictions for current account transactions as may be prescribed.
Capital account transactions.12
6. (1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to
or from an authorised person for a capital account transaction.
(2) The Reserve Bank may, in consultation with the Central Government, specify—
12a
[(a) any class or classes of capital account transactions, involving debt instruments, which are
permissible13
;]
(b) the limit up to which foreign exchange shall be admissible for such transactions;
13a
[(c) any conditions which may be placed on such transactions:]
2.7 CAPITAL ACCOUNT TRANSACTIONS S. 6
11. See FEM (Current Account Transactions) Rules, 2000. (See Division Three)
See Master Direction : Liberalized Remittance Scheme (LRS) [No. 7/2015-16, dated 1-1-2016]; Other Remittance
Facilities [No. 8/2015-16, dated 1-1-2016]; Export of Goods & Services [No. 16/2015-16, dated 1-1-2016] and
Import of Goods and Services [No. 17/2016-17, dated 1-1-2016]. (See Division Five)
12. See FEM (Offshore Banking Unit) Regulations, 2002/FEM (Permissible Capital Account Transactions) Regu-
lations, 2000. (See Division Three)
See Master Direction : Insurance [No. 9/2015-16, dated 1-1-2016] and Risk Management & Inter Bank Dealings
[No. 1/2016-17, dated 5-7-2016]. (See Division Five)
12a. Substituted by the Finance Act, 2015, w.e.f. 15-10-2019. Prior to its substitution, clause (a) read as under :
“(a) any class or classes of capital account transactions which are permissible;”
13. See FEM (Debt Instruments) Regulations, 2019. (See Division Three)
13a. Inserted by the Finance Act, 2015, w.e.f. 15-10-2019.

13b
[Provided that the Reserve Bank or the Central Government shall not impose any restrictions on
the drawal of foreign exchange for payment due on account of amortisation of loans or for
depreciation of direct investments in the ordinary course of business.]
14
[(2A) The Central Government may, in consultation with the Reserve Bank, prescribe—
(a) any class or classes of capital account transactions, not involving debt instruments, which are
permissible;
(b) the limit up to which foreign exchange shall be admissible for such transactions; and
(c) any conditions which may be placed on such transactions.]
(3) 15-25
[***]
13b. Substituted by the Finance Act, 2015, w.e.f. 15-10-2019. Prior to its substitution, proviso read as under :
“Provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for
payments due on account of amortization of loans or for depreciation of direct investments in the ordinary
course of business.”
14. Inserted, ibid.
15-25. Omitted, ibid. Prior to its substitution, sub-section (3) read as under :
“(3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by
regulations, prohibit, restrict or regulate the followinga
—
(a) transfer or issue of any foreign security by a person resident in Indiab
;
(b) transfer or issue of any security by a person resident outside Indiac
;
(c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person
resident outside Indiad
;
(d) any borrowing or lending in foreign exchange in whatever form or by whatever name callede
;
(e) any borrowing or lending in rupees in whatever form or by whatever name called between a person
resident in India and a person resident outside Indiaf
;
(f) deposits between persons resident in India and persons resident outside Indiag
;
(g) export, import or holding of currency or currency notesh
;
(h) transfer of immovable property outside India, other than a lease not exceeding five years, by a person
resident in Indiai
;
(i) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by
a person resident outside India;
(j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred—
(i) by a person resident in India and owed to a person resident outside India; or
(ii) by a person resident outside Indiaj
.
a.
See FEM (Cross Border Merger) Regulations, 2018. (See Division Three)
See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management
Act, 1999 [No. 12/2015-16, dated 1-1-2016]; Deposits and Accounts [No. 14/2015-16, dated 1-1-2016]. (See
Division Five)
b.
See FEM (Transfer or Issue of any Foreign Security) Regulations, 2004/FEM (Borrowing and Lending)
Regulations, 2018. (See Division Three)
See Master Direction : Direct Investment by Residents in Joint Venture (JV)/Wholly Owned Subsidiary (WOS)
Abroad [No. 15/2015-16, dated 1-1-2016]; External Commercial Borrowings, Trade Credits and Structured
Obligations [No. 5/2018-19, dated 26-3-2019]. (See Division Five)
c.
See FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003. (See
Division Three)
See Master Direction : Foreign Investment in India [No. 11/2017-18, dated 4-1-2018]. (See Division Five)
d.
See FEM (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India)
Regulations, 2000. (See Division Three)
(Contd. on page 2.9)

26
(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security
or any immovable property situated outside India if such currency, security or property was
acquired, held or owned by such person when he was resident outside India or inherited from a
person who was resident outside India27
.
(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or
any immovable property situated in India if such currency, security or property was acquired, held
or owned by such person when he was resident in India or inherited from a person who was resident
in India28
.
(6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit,
restrict, or regulate establishment in India of a branch, office or other place of business by a person
2.9 CAPITAL ACCOUNT TRANSACTIONS S. 6
(Contd. from page 2.8)
e.
See FEM (Borrowing and Lending) Regulations, 2018/FEM [Withdrawal of General Permission to Overseas
Corporate Bodies (OCBs)] Regulations, 2003. (See Division Three)
See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/
2018-19, dated 26-3-2019]. (See Division Five)
f.
See FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003/FEM
(Borrowing and Lending) Regulations, 2018. (See Division Three)
See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/
2018-19, dated 26-3-2019]; Borrowing and Lending transactions in Indian Rupee between Persons Resident in
India and Non-Resident Indians/Persons of Indian Origin [No. 6/2015-16, dated 1-1-2016]. (See Division Five)
g.
See FEM (Crystallisation of Inoperative Foreign Currency Deposits) Regulations, 2014/FEM [Withdrawal of
General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003/FEM (Deposit) Regulations, 2016.
(See Division Three)
See Master Direction : Deposits & Accounts [No. 14/2015-16, dated 1-1-2016]. (See Division Five)
h.
See FEM (Export and Import of Currency) Regulations, 2015. (See Division Three)
i.
See FEM (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015. (See Division
Three)
See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management
Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five)
j.
See FEM (Guarantees) Regulations, 2000. (See Division Three)
See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/2018-
19, dated 26-3-2019]. (See Division Five)
Section 47(3), with effect from 15-10-2019, provides that all Regulations/Master Directions issued by RBI prior
to omission of section 6(3), i.e., 15-10-2019, shall continue to be valid until amended or rescinded by the Central
Government.
26. See Master Direction : Miscellaneous [No. 19/2015-16, dated 1-1-2016]; Acquisition and Transfer of Immovable
Property under Foreign Exchange Management Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five)
27. AP (DIR Series) (2013-14) Circular No. 90, dated 9-1-2014 clarifies that section 6(4) of FEMA, 1999 covers the
following transactions:
(i) Foreign currency accounts opened and maintained by such a person when he was resident outside India;
(ii) Income earned through employment or business or vocation outside India taken up or commenced while
such person was resident outside India, or from investments made while such person was resident
outside India, or from gift or inheritance received while such a person was resident outside India;
(iii) Foreign exchange including any income arising therefrom, and conversion or replacement or accrual to
the same, held outside India by a person resident in India acquired by way of inheritance from a person
resident outside India;
(iv) A person resident in India may freely utilise all their eligible assets abroad as well as income on such assets
or sale proceeds thereof received after their return to India for making any payments or to make any
fresh investments abroad without approval of Reserve Bank, provided the cost of such investments and/
or any subsequent payments received therefor are met exclusively out of funds forming part of eligible
assets held by them and the transaction is not in contravention to extant FEMA provisions.
28. See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management
Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five)

resident outside India, for carrying on any activity relating to such branch, office or other place of
business29
.
30
[(7) For the purposes of this section, the term “debt instruments” shall mean, such instruments as
may be determined by the Central Government in consultation with the Reserve Bank.31
]
Export of goods and services.32
7. (1) Every exporter of goods shall—
(a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such
manner as may be specified, containing true and correct material particulars, including the
amount representing the full export value or, if the full export value of the goods is not
ascertainable at the time of export, the value which the exporter, having regard to the
prevailing market conditions, expects to receive on the sale of the goods in a market outside
India33
;
(b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank
for the purpose of ensuring the realisation of the export proceeds by such exporter.
(2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such
reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market
conditions, is received without any delay, direct any exporter to comply with such requirements as
it deems fit.
(3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a
declaration in such form and in such manner as may be specified, containing the true and correct
material particulars in relation to payment for such services33
.
Realisation and repatriation of foreign exchange.34
8. Save as otherwise provided in this Act, where any amount of foreign exchange is due or has
accrued to any person resident in India, such person shall take all reasonable steps to realise and
repatriatetoIndiasuchforeignexchangewithinsuchperiodandinsuchmannerasmaybespecified
by the Reserve Bank.
Exemption from realisation and repatriation in certain cases.35
9. The provisions of sections 4 and 8 shall not apply to the following, namely:—
29. See FEM (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place
of Business) Regulations, 2016. (See Division Three)
See Master Direction : Establishment of Branch Office (BO)/Liaison Office (LO)/Project Office (PO) or any other
Place of Business in India by foreign entities [No. 10/2015-16, dated 1-1-2016]. (See Division Five)
30. Inserted by the Finance Act, 2015, w.e.f. 15-10-2019.
31. See Notification No. SO 3722(E), dated 16-10-2019 (see Division Four).
32. See FEM (Offshore Banking Unit) Regulations, 2002. (See Division Three)
33. See FEM (Export of Goods and Services) Regulations, 2015. (See Division Three)
See Master Direction : Export of Goods & Services [No. 16/2015-16, dated 1-1-2016]. (See Division Five)
34. See FEM (Offshore Banking Unit) Regulations, 2002/FEM (Realisation, Repatriation and Surrender of Foreign
Exchange) Regulations, 2015. (See Division Three)
35. See FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015/FEM (Offshore Banking
Unit) Regulations, 2002/FEM (Crystallisation of Inoperative Foreign Currency Deposits) Regulations, 2014.
See Master Direction : Deposits and Accounts [No. 14/2015-16, dated 1-1-2016]. (See Division Five)

(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve
Bank may specify36
;
(b) foreign currency account held or operated by such person or class of persons and the limit up
to which the Reserve Bank may specify;
(c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising
or accruing thereon which is held outside India by any person in pursuance of a general or
special permission granted by the Reserve Bank;
(d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may
specify, if such foreign exchange was acquired by way of gift or inheritance from a person
referred to in clause (c), including any income arising therefrom;
(e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium,
gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may
specify36
; and
(f) such other receipts in foreign exchange as the Reserve Bank may specify.
CHAPTER III
AUTHORISED PERSON
Authorised person.
10. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to
be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised
dealer, money changer or off-shore banking unit or in any other manner as it deems fit37
.
(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid
down therein.
(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time
if the Reserve Bank is satisfied that—
(a) it is in public interest so to do; or
(b) theauthorisedpersonhasfailedtocomplywiththeconditionsubjecttowhichtheauthorisation
was granted or has contravened any of the provisions of the Act or any rule, regulation,
notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless
the authorised person has been given a reasonable opportunity of making a representation in the
matter.
(4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with
such general or special directions or orders as the Reserve Bank may, from time to time, think fit
to give, and, except with the previous permission of the Reserve Bank, an authorised person shall
not engage in any transaction involving any foreign exchange or foreign security which is not in
conformity with the terms of his authorisation under this section38
.
(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of
any person, require that person to make such declaration and to give such information as will
reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of
2.11 AUTHORISED PERSON S. 10
36. See FEM (Possession and Retention of Foreign Currency) Regulations, 2015. (See Division Three)
37. See Master Direction : Money Transfer Service Scheme (MTSS) [No. 1/2016-17, dated 22-2-2017]; Money
Changing Activities [No. 3/2015-16, dated 1-1-2016]. (See Division Five)
38. See Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018.

Description
The Foreign Exchange Management Act (FEMA) consolidates the law relating to foreign exchange. The objective of
the FEMA is to facilitate external trade and payments and promote the orderly development and maintenance of
foreign exchange markets in India. Though the Reserve Bank of India (RBI) exercises overall control over foreign
exchange transactions, enforcement of FEMA has been entrusted to the ‘Directorate of Enforcement’.
The RBI frequently issues Rules, Regulations, and Notifications on various matters. Any change in such Rules or
policy is communicated during the year by way of Circulars/Press Releases. Further, the RBI issues the Master
Directions to consolidate Instructions on Rules and Regulations framed under various Acts, including foreign
exchange transactions.
Taxmann’s Foreign Exchange Management Manual is a compendium of Amended, Updated & Annotated text of
the following laws:
u Foreign Exchange Management Act, 1999
u Foreign Contributions
u Prevention of Money Laundering
u Foreign Direct Investment (FDI) Policy
What sets this book apart is the unique way of presenting the Annotated, Amended & Updated text of the above
Laws along with the following under each Section:
u Foreign Exchange Management Act, 1999 (FEMA)
n Relevant Rules & Regulations framed under FEMA
n Notifications issued under FEMA
n Master Directions
n Memorandum of Instructions
u Foreign Contributions
n Relevant Rules & Regulations
n Standard Operating Procedure
n Frequently Asked Questions
n Case Laws Digest
u Prevention of Money Laundering
n Relevant Rules & Regulations
n Relevant Notifications
n Relevant Directions
n EURO Issue, Issue of Foreign Currency Convertible Bonds, Ordinary Shares through Depository Receipt
Mechanism, Issue of Foreign Currency Exchange Bonds
n Allied Acts/Rules & Guidelines
u Foreign Direct Investment (FDI) Policy
n Relevant Circulars (2017-2021)
n Summary Table of Section-wise FDI Policy
Rs. 5995
PUBLISHER : TAXMANN
DATE OF PUBLICATION : JULY 2021
EDITION : 38TH EDITION
ISBN NO : 9788195371464
NO. OF PAPERS : 3018
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