To develop and maintain the cell of foreign exchange market in India; Reserve Bank Of India has launched Foreign Exchange Management Act FEMA in 1999 taken as a initiative step. The main objectives behind launching this esteem act are to facilitate the external trade and payments, maintenance of foreign exchange market in India and for promoting the orderly development of foreign exchange market in India. This act is an amendment of previous act of Foreign Exchange Regulation Act (FERA) where this act seems to incompatible with Indian Government's pro-liberalization policies. As you scroll with RBI FEMA notifications you will find numbers of amendments that have been prescribed by the higher authority of Reserve Bank Of India. This new act of FEMA RBI is somewhere aimed to synchronize with framework of World Trade Organization WTO. The rules and regulations of FEMA RBI is also seems to be consistent with Prevention of Money Laundering Act of 2002.
- While transition with people living in abroad or have immovable property in abroad or deal in foreign security need to follow FEMA rules.
- FEMA imposed restrictions for payment or receipt by people living outside country.
- Only after formal permission by concerned authority of FEMA one can deal in foreign market or can follow payment or receipt transaction with people ion abroad.
- Exporters need to follow exact rules and regulations where they need to submit all legal documents to RBI.