Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Authorities under FEMA and Their Powers for CA Inter

Updated 4 October 2026 · Fact-checked

FEMA is run by the Central Government, the RBI, Adjudicating Authorities, the Special Director (Appeals) and the Appellate Tribunal. The RBI authorises dealers and gives directions. Adjudicating Authorities decide contraventions. Appeals from Assistant or Deputy Director orders go to the Special Director (Appeals); other orders go to the Appellate Tribunal; then the High Court on a question of law.

Understand Authorities under FEMA and Their Powers

FEMA is a civil law. It does not treat most breaches as crimes. It sets up a chain of authorities: some make rules, some regulate, some decide and some hear appeals. If you remember the chain in order, most questions become easy.

Central Government makes rules, for example on current account transactions. It appoints the Adjudicating Authorities and the Special Director (Appeals), and it establishes the Appellate Tribunal. The Reserve Bank of India (RBI) is the main regulator. It makes regulations on capital account transactions and other matters, and it controls who may deal in foreign exchange.

The RBI can authorise a person, such as an authorised dealer or money changer, to deal in foreign exchange or foreign securities. It can also give directions to authorised persons and inspect their business. Note: these RBI powers, and the penalty for breaking an RBI direction, sit in sections of FEMA that are not in the official text this page was checked against. Learn them as general rules and confirm the exact section numbers, amounts and conditions from your ICAI study material.

When a contravention of FEMA is alleged under section 13, the Adjudicating Authority holds an inquiry. It is an officer of the Central Government appointed by notification. The inquiry starts only on a written complaint by an authorised officer. The Adjudicating Authority gives the person a reasonable opportunity of being heard and then decides whether there was a contravention and what penalty to impose. The person may appear in person or take the help of a legal practitioner or a chartered accountant.

A person aggrieved can appeal. If the Adjudicating Authority who passed the order is an Assistant Director or a Deputy Director of Enforcement, the appeal goes to the Special Director (Appeals) (section 17). Orders of the Special Director (Appeals), and orders of other Adjudicating Authorities not covered by section 17, go to the Appellate Tribunal (section 19). The Central Government can also appeal to the Tribunal. A further appeal on a question of law lies to the High Court. This last stage is not covered by the supplied official text, so confirm its time limit from your study material.

Key rules to remember

RBI powers over authorised persons (not checked against the supplied text): RBI → authorises dealer / money changer / other person to deal in foreign exchange; issues directions; inspects their business; These powers come from sections of FEMA outside the text this page was checked against. Learn the general rule and confirm section numbers, penalty amounts and conditions from your study material.
Adjudicating Authority (section 16): Appointed by Central Government → written complaint by authorised officer → inquiry → hearing → order (contravention and penalty); Hearing before an order is a must. The person may appear in person or through a legal practitioner or chartered accountant.
First appeal (section 17): Order of an Adjudicating Authority who is an Assistant Director or Deputy Director of Enforcement → Special Director (Appeals) within 45 days of receiving the order copy; The Special Director (Appeals) may entertain a late appeal if there was sufficient cause for the delay.
Second appeal (section 19): Order of the Special Director (Appeals), or of an Adjudicating Authority not covered by section 17 → Appellate Tribunal within 45 days of receiving the order copy; The Central Government or any aggrieved person may appeal. The Tribunal may entertain a late appeal for sufficient cause.
High Court appeal (not checked against the supplied text): Appellate Tribunal decision → High Court, on a question of law only; This stage is outside the supplied official text. Confirm the section number and the time limit from your study material before quoting them.
Pre-deposit rule (proviso to section 19(1)): Appeal to the Appellate Tribunal against an order levying a penalty → deposit the penalty amount while filing the appeal, with the authority notified by the Central Government; The Appellate Tribunal may dispense with the deposit if it thinks the deposit would cause undue hardship, subject to conditions to safeguard realisation of the penalty. Section 17 has no such deposit proviso.

How to solve Authorities under FEMA and Their Powers questions

Most questions give a facts pattern and ask who can act, who decides or where to appeal. Use this order.

1Identify the type of act: rule-making, regulation, authorisation, direction, inspection, adjudication or appeal.
2If it is rule-making or appointment of officers, the answer is the Central Government. If it is regulation, authorisation, directions or inspection of dealers, the answer is the RBI.
3If a contravention is alleged against a person, name the Adjudicating Authority and state that it must hold an inquiry and give a reasonable opportunity of being heard.
4For appeals, check who passed the order. If the Adjudicating Authority is an Assistant Director or Deputy Director of Enforcement, the appeal goes to the Special Director (Appeals). An order of the Special Director (Appeals), or of an Adjudicating Authority not covered by section 17, goes to the Appellate Tribunal.
5State the time limit: 45 days for the appeal to the Special Director (Appeals) and 45 days for the appeal to the Appellate Tribunal. Add that late appeals can be entertained for sufficient cause. For the High Court, say the appeal lies on a question of law and give the time limit from your study material.
6For an appeal to the Appellate Tribunal against a penalty, mention the pre-deposit of the penalty, and that the Tribunal may dispense with it on undue hardship, subject to conditions.
7Close with a one-line conclusion that answers the exact question asked.

Quickest way: Authority chain and 45-45 rule

When to use it: Use this for MCQs and for short written answers where you must name the authority or appeal route.

Write the chain: Central Government (rules, appointments) → RBI (regulates) → Adjudicating Authority (decides) → Special Director (Appeals) (for Assistant or Deputy Director orders) → Appellate Tribunal → High Court (question of law).
Fix the numbers: 45 days for the first appeal and 45 days for the Tribunal. A late appeal can be entertained for sufficient cause. Learn the High Court period from your study material.
In MCQs, eliminate options that send an appeal directly to the High Court or the Supreme Court, and options that give the RBI power to adjudicate contraventions under section 13.
In written answers use the format: provision, facts, conclusion. Name the authority, state the power, apply it to the facts and end with a clear conclusion. Each part earns step marks.

Common mistakes in Authorities under FEMA and Their Powers

Saying the RBI adjudicates contraventions of FEMA.
Students link FEMA so closely with the RBI that they assume it decides everything.
Fix: The RBI regulates and authorises. The Adjudicating Authority, appointed by the Central Government, holds the inquiry and decides the penalty for contraventions under section 13. The RBI's own penalty power relates to its directions to authorised persons; confirm the details from your study material.
Sending every first appeal to the Special Director (Appeals), or every appeal straight to the Appellate Tribunal.
Students remember the two bodies but forget which orders go where.
Fix: Check who passed the order. If the Adjudicating Authority is an Assistant Director or Deputy Director of Enforcement, the appeal goes to the Special Director (Appeals). Other Adjudicating Authorities' orders and the Special Director (Appeals)'s orders go to the Appellate Tribunal.
Mixing up time limits, such as 30 or 90 days.
Students confuse FEMA with other laws that use different periods.
Fix: Learn 45 days for the appeal to the Special Director (Appeals) and 45 days for the appeal to the Appellate Tribunal. Add that a late appeal can be entertained for sufficient cause.
Saying the High Court hears appeals on facts.
Students treat it like an ordinary appeal.
Fix: The High Court appeal lies only on a question of law arising out of the Appellate Tribunal's order. Confirm the time limit from your study material.
Forgetting the hearing safeguard: a reasonable opportunity of being heard is needed before the Adjudicating Authority imposes a penalty.
Students focus on the power and skip the safeguard.
Fix: Always write 'after giving a reasonable opportunity of being heard' and name the authority that imposes the penalty.
Ignoring the pre-deposit when answering on appeals against penalties to the Appellate Tribunal.
It sits in a proviso and is easy to miss.
Fix: Add one line: the penalty must be deposited while filing the appeal to the Tribunal, unless the Tribunal dispenses with it for undue hardship, subject to conditions.

Worked examples

Example 1

An Adjudicating Authority, who is a Deputy Director of Enforcement, holds that X Ltd contravened FEMA and imposes a penalty. The Special Director (Appeals) later confirms the order and X Ltd wants to challenge it further. Advise on the appeal route, time limits and deposit.

Show the solution

Provision: the Adjudicating Authority decides contraventions after an inquiry. A person aggrieved by its order may appeal.
Facts: the order was passed by a Deputy Director of Enforcement acting as Adjudicating Authority.
First appeal: X Ltd must appeal to the Special Director (Appeals) within 45 days of receiving the order copy. A late appeal can be entertained if there was sufficient cause.
Second appeal: against the order of the Special Director (Appeals), X Ltd can appeal to the Appellate Tribunal within 45 days of receiving that order copy. A late appeal can be entertained for sufficient cause.
Pre-deposit: while filing the appeal to the Tribunal, X Ltd must deposit the penalty amount with the authority notified by the Central Government. The Tribunal may dispense with the deposit, subject to conditions, if it would cause undue hardship.
Further appeal: against the Tribunal's decision, X Ltd can go to the High Court on a question of law only. The time limit for this stage is not in the supplied text, so state it from your study material.

Answer: X Ltd should appeal to the Special Director (Appeals) within 45 days, then to the Appellate Tribunal within 45 days with the penalty deposited (unless the Tribunal dispenses with it for undue hardship), and then to the High Court on a question of law within the period given in the Act. Late appeals to the first two forums can be entertained for sufficient cause.

Example 2

Bright Forex, an authorised money changer, ignores a direction issued by the RBI and does not allow RBI officers to see its books. What powers does the RBI have?

Show the solution

Provision: the RBI can authorise a person to deal in foreign exchange, issue directions to authorised persons, and inspect their business. (These powers are outside the supplied official text, so confirm section numbers from your study material.)
Facts: Bright Forex is an authorised person. It has not followed a direction and has refused inspection.
Direction: contravening an RBI direction attracts a penalty under FEMA. Quote the amount only from your study material, and note that the RBI must give a reasonable opportunity of being heard before imposing it.
Inspection: the authorised person must allow the RBI to inspect and must produce the books and documents asked for. Refusal is itself a ground for action.
Authorisation: the RBI can take action against the authorisation for breach of its conditions, after giving a reasonable opportunity of being heard.

Answer: Bright Forex is liable to a penalty for contravening the RBI direction, imposed by the RBI after a hearing. The RBI can also act against its authorisation after giving a reasonable opportunity of being heard. Bright Forex must also allow the inspection.

Exam tips

Draw the appeal chain in the margin before you write. It shows the examiner the structure and prevents route mistakes.
For ICAI-style case scenarios, always name the authority first and then the power. Provision, facts and conclusion earn separate marks.
Expect MCQs on time limits, the authority that hears the first appeal and the grounds for High Court appeal. These are quick marks if you know the 45-day limits and that the High Court hears only questions of law.
Do not quote section numbers unless you are sure. A correct rule with the right authority and period is safer than a wrong section.

Practice questions from The Foreign Exchange Management Act, 1999

Authorities under FEMA and Their Powers in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ExecutiveAuthorities and Reserve Bank Powers under FEMA

Authorities under FEMA and Their Powers: frequently asked questions

Who are the authorities under FEMA 1999?

The main authorities are the Central Government, the Reserve Bank of India, the Adjudicating Authorities, the Special Director (Appeals) and the Appellate Tribunal. Authorised persons such as authorised dealers also work under the RBI's control. The High Court hears the final appeal on a question of law.

What are the powers of RBI under FEMA?

The RBI can authorise persons to deal in foreign exchange, issue directions to authorised persons and inspect their business. It can also make regulations, for example on capital account transactions. The exact sections, penalty amounts and conditions for these powers are outside the text this page was checked against, so confirm them from your study material.

Where is the appeal against an order of the Adjudicating Authority under FEMA?

If the Adjudicating Authority is an Assistant Director or Deputy Director of Enforcement, the appeal goes to the Special Director (Appeals) within 45 days of receiving the order. Orders of other Adjudicating Authorities not covered by section 17, and orders of the Special Director (Appeals), go to the Appellate Tribunal within 45 days. For an appeal to the Tribunal against a penalty, the penalty must be deposited unless the Tribunal dispenses with it on undue hardship.

Can the High Court hear a FEMA appeal on facts?

No. An appeal from the Appellate Tribunal lies to the High Court on a question of law arising out of the order. The time limit for this appeal is not in the text this page was checked against, so confirm it from your study material.