The Enforcement Directorate recently conducted searches at three premises belonging to Byju Raveendran under the provisions of the Foreign Exchange Management Act (FEMA). This incident has raised concerns and questions about the act and its provisions.
Understanding the Foreign Exchange Management Act
The Foreign Exchange Management Act was enacted by the Parliament in 1999 to replace the Foreign Exchange Regulation Act of 1973. It came into force on June 1, 2000. The act is amended from time to time to align with the changing economic policies and objectives of the government.
The Directorate of Enforcement was established by the Central government to investigate cases under the act. The act applies to the whole of India, including branches, offices, and agencies outside India owned or controlled by a person resident in India, and any contravention committed outside India by a person to whom the act applies.
The act provides a legislative and regulatory framework for inbound and outbound investments, facilitates trade and business opportunities between India and other countries, and lays down provisions for current account and capital account transactions. The RBI is the regulatory body and plays a controlling role in the management of foreign exchange.
Key Provisions of FEMA
The key provisions of the Foreign Exchange Management Act include:
- Legislative and regulatory framework: The act provides a framework for inbound and outbound investments, trade and business opportunities, and transactions related to current and capital accounts.
- Powers of RBI and Central government: The act empowers the RBI and Central government to frame and pass regulations and rules that are consistent with the foreign trade policy of the country.
- Enforcement provisions: The act provides for enforcement, penalties, adjudication, and appeal.
Objectives of FEMA
The primary objective of the Foreign Exchange Management Act is to consolidate and amend the law relating to foreign exchange. It aims to facilitate external trade and payments, promote the orderly development and maintenance of the foreign exchange market in India, and prevent and control illegal activities related to foreign exchange.
Progress of FEMA
The Central government and RBI have been successful in fulfilling the broad objectives of the Foreign Exchange Management Act. The act has been a reformative legislation that has also eliminated the ills of its predecessor, the Foreign Exchange Regulation Act.
Important Points:
🔍 The Enforcement Directorate recently conducted searches at three premises belonging to Byju Raveendran under the provisions of the Foreign Exchange Management Act (FEMA).
🌍 The Foreign Exchange Management Act was enacted by the Parliament in 1999 to replace the Foreign Exchange Regulation Act of 1973. Its objective is to facilitate external trade and payments, promote the orderly development and maintenance of the foreign exchange market in India, and prevent and control illegal activities related to foreign exchange.
💼 The act provides a legislative and regulatory framework for inbound and outbound investments, trade and business opportunities, and transactions related to current and capital accounts. The RBI is the regulatory body and plays a controlling role in the management of foreign exchange.
💪 The act empowers the RBI and Central government to frame and pass regulations and rules that are consistent with the foreign trade policy of the country.
🚔 The Directorate of Enforcement was established by the Central government to investigate cases under the act. The act applies to the whole of India, including branches, offices, and agencies outside India owned or controlled by a person resident in India, and any contravention committed outside India by a person to whom the act applies.
✅ The Central government and RBI have been successful in fulfilling the broad objectives of the Foreign Exchange Management Act. The act has been a reformative legislation that has also eliminated the ills of its predecessor, the Foreign Exchange Regulation Act.
Why In News
The recent searches at Byju Raveendran’s three premises by the Enforcement Directorate is a part of their ongoing investigation under the provisions of the Foreign Exchange Management Act (FEMA).
MCQs about Foreign Exchange Management Act
-
What is the objective of the Foreign Exchange Management Act (FEMA)?
A. To control and restrict external trade and payments in India
B. To promote illegal activities related to foreign exchange
C. To facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India
D. To eliminate the RBI’s controlling role in the management of foreign exchange
-
Who is the regulatory body and plays a controlling role in the management of foreign exchange?
A. The Central Government
B. The Directorate of Enforcement
C. The Reserve Bank of India (RBI)
D. The Securities and Exchange Board of India (SEBI)
-
Which act was enacted to replace the Foreign Exchange Regulation Act of 1973?
A. The Foreign Trade Policy Act of 1999
B. The Foreign Exchange Management Act of 1999
C. The Foreign Investment Promotion Act of 1999
D. The Foreign Companies Act of 1999
-
What is the Directorate of Enforcement?
A. A regulatory body that controls and manages foreign exchange in India
B. A governmental agency that facilitates external trade and payments in India
C. An independent agency that investigates cases related to foreign exchange under FEMA
D. A trade union that represents foreign exchange traders in India
Boost up your confidence by appearing our Weekly Current Affairs Multiple Choice Questions
