| Foreign
exchange transactions in India have become more liberalized
with the Foreign Exchange Management Act, 1999 (FEMA) which
came into operation as of 1st June 2000.
Foreign
exchange dealers in India today have been given powers of
making all types of remittances in foreign exchange subject to
present rules.
The
previous requirements of seeking Reserve Bank of India
permission has been eliminated for most
transactions.
I
remember leaving India in 1970 when I was allowed to purchase
only 8 dollars in foreign exchange for my travel abroad.
Things have indeed changed today in India as far as foreign
currency transactions are concerned.
Here
are some of the significant provisions from FEMA
Application For
Remittances Foreign Currency
- A
person, firm or bank may apply to an Authorized Dealer for
remittances in any foreign currency to a beneficiary
abroad.
- Application
should be made in FORM -A1, if the purpose of remittance is
import of goods into India.
- For
any other purpose in Form -A2
- The
Authorized Dealer may sell the foreign Exchange applied for
provided the purpose of the request is an approved one.
Mode of
Payment of Rupees Against Sale of Foreign
Exchange
Transactions amounting to Rupees 20,000 or more should be made
by cheque payments. Payment can also be accepted in the form
of a Banker's cheque / Pay Order / Demand Draft. Receipt of
Payment in cash in case of such sale of foreign Exchange or
remittance in foreign Exchange is strictly
prohibited.
Exceptions
- If
the purpose of sale of foreign exchange is for travel abroad
for business etc, cash may be received by Authorized Dealer
from Applicant up to Rs. 50,000/-
- Where
the rupee equivalent for drawing foreign exchange exceeds
Rs.50,000 either for any single installment or for more than
one installment for a single journey / visit, it should be
paid by the traveler by means of a cross
cheque / demand
draft/ pay order.
Travellers
Cheques Negotiable Only in India
Rupee
Travelers cheque cannot be cashed outside India, if they are
issued solely for use within India. In such a case they cannot
be taken or sent out of India.
Reconversion of
Indian Currency
Foreign
currency may be sold against Indian Rupees held by persons who
are not resident of India but are passing through or leaving
India after a visit, at the time of their departure from
India.
For
this purpose, a Bank or Encashment certificate issued by an
Authorized Dealer, Exchange bureau or Authorized Money changer
in form BCI, ECF OR ECR, is required to show that the rupee
had been acquired by sale of foreign Exchange to an Authorized
Dealer or money changer in
India.
Such a certificate is valid for such reconversion i.e. a
period of three months is not over from the date of sale of
the foreign currency by the traveler.
Rates of
Exchange
Authorized
dealers and their Exchange bureau may buy from and sell to
public foreign currency notes and coins at rates of exchange
determined by market conditions. Dealings in foreign currency
notes and coins between authorized dealers and between
authorized dealers and money changers would also be at rates
determined by market conditions |
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