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Setting Up of Business, Industrial and Labour Laws · Setting up of Business outside India and Issues Relating thereto

Section 37A of FEMA: Assets Held Abroad in Contravention of Section 4

Updated 11 October 2026 · Fact-checked

Section 37A FEMA lets the Authorised Officer seize assets in India equal in value to foreign exchange, foreign security or immovable property held abroad in suspected contravention of section 4. The Competent Authority must confirm or set aside the seizure within 180 days. Confirmed seizure lasts until adjudication ends. Appeal lies to the Appellate Tribunal.

Understand Section 37A: Assets Held Abroad in Contravention of Section 4

Section 4 of FEMA says that, save as otherwise provided in the Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or immovable property situated outside India. Section 4 is the substantive rule. Section 37A is a special enforcement tool for breaches of it.

The problem it solves is practical. Assets abroad are hard to reach. So section 37A lets the authorities go after value equivalent, situated within India, instead of the foreign asset itself. It was inserted by the Act 20 of 2015 with effect from 9 September 2015.

The process runs in stages. First, the Authorised Officer (prescribed by the Central Government) must have reason to believe the asset is suspected to be held in contravention of section 4. He must record reasons in writing and pass a seizure order. Second, the order and relevant material go to the Competent Authority. Third, the Competent Authority confirms or sets aside the order after a hearing. Fourth, a confirmed seizure continues until adjudication, and the Adjudicating Authority then gives directions on it.

There is a relief valve. If the aggrieved person, at any stage, discloses the asset and brings it back into India, he can apply. After a hearing, the Competent Authority or Adjudicating Authority passes an appropriate order, which may include setting aside the seizure.

Do not confuse the two provisions. Section 4 prohibits holding the asset. Section 37A deals with seizing equivalent value in India. Related penalty and prosecution provisions sit in section 13(1A) to (1D), which apply where the aggregate value exceeds the prescribed threshold.

Key rules to remember

Trigger for seizure
Reason to believe + reasons recorded in writing + asset outside India suspected held in contravention of section 4
Order is passed by the Authorised Officer prescribed by the Central Government. Section 37A(1).
What is seized
Value equivalent, situated within India, of the foreign exchange, foreign security or immovable property
The Indian asset seized is of equal value. The foreign asset itself is not seized.
Threshold proviso
No seizure if aggregate value of the foreign assets < value prescribed
The amount is prescribed in rules. Do not quote a figure unless it is given in the question.
Placing before Competent Authority
Within 30 days from the date of seizure
The Authorised Officer places the order with relevant material before the Competent Authority, an officer not below the rank of Joint Secretary to the Government of India. Section 37A(2).
Disposal period
Within 180 days from the date of seizure
Confirm or set aside after hearing the Directorate of Enforcement and the aggrieved person. Court stay period is excluded, and at least 30 more days are given after the stay is vacated. Section 37A(3).
Duration of confirmed seizure
Continues till disposal of adjudication proceedings
Adjudicating Authority then gives directions on further action. Section 37A(4).
Bring-back relief
Disclose asset + bring back into India + apply + hearing = appropriate order, including setting aside seizure
Available at any stage of proceedings under the Act. Proviso to section 37A(4).
Appeal and section 15
Appeal against Competent Authority order to the Appellate Tribunal; section 15 does not apply
Section 37A(5) and (6). Section 15 is the compounding provision, so compounding is not available under this section.

How to solve Section 37A: Assets Held Abroad in Contravention of Section 4 questions

Use this order for any question on section 37A. It mirrors how ICSI expects the provision, the facts and the conclusion.

  1. 1Identify the base contravention. Check whether a person resident in India holds foreign exchange, foreign security or immovable property outside India, which section 4 prohibits unless the Act allows it.
  2. 2State that section 37A applies where the Authorised Officer has reason to believe the foreign asset is suspected to be held in contravention of section 4, and that he must record reasons in writing.
  3. 3Check the threshold. If the aggregate value of the foreign assets is below the prescribed value, no seizure can be made.
  4. 4Explain the seizure: value equivalent, situated within India, not the foreign asset itself.
  5. 5Apply the timelines. The order goes to the Competent Authority within 30 days of seizure. The Competent Authority decides within 180 days, after hearing both sides, excluding court stay periods.
  6. 6State the effect of confirmation: it continues till adjudication ends, and the Adjudicating Authority then gives directions.
  7. 7Mention remedies: bring-back and disclosure under the proviso to section 37A(4), and appeal to the Appellate Tribunal under section 37A(5).
  8. 8Write a clear conclusion that answers the exact question, such as whether the seizure is valid or what the person can do.

Quickest way: Remember it as: Believe, Seize, Place, Decide, Continue, Appeal

When to use it: Use it for short notes and for case-based questions where you must quickly list the procedure and the timelines.

  1. Believe: Authorised Officer has reason to believe and records reasons.
  2. Seize: equivalent value in India; not allowed below the prescribed threshold.
  3. Place: before Competent Authority (Joint Secretary or above) within 30 days.
  4. Decide: confirm or set aside within 180 days after hearing both sides.
  5. Continue: confirmed seizure lasts till adjudication ends.
  6. Appeal: to the Appellate Tribunal; bring-back route available; section 15 excluded.

Common mistakes in Section 37A: Assets Held Abroad in Contravention of Section 4

  • Saying the Authorised Officer seizes the foreign asset itself.

    The word 'seizure' suggests the actual asset is taken.

    Fix: Write that only value equivalent, situated within India, is seized because the foreign asset is out of reach.

  • Mixing up the 30-day and 180-day periods.

    Both periods run from the date of seizure, so they look alike.

    Fix: 30 days is for placing the order before the Competent Authority. 180 days is for the Competent Authority to dispose of the matter.

  • Treating section 37A as the provision that creates the prohibition.

    Students read it as the main section on assets abroad.

    Fix: Section 4 is the prohibition. Section 37A is the special seizure procedure for suspected breach of section 4.

  • Saying the Adjudicating Authority passes the seizure confirmation.

    Adjudication is a familiar FEMA term.

    Fix: The Competent Authority confirms or sets aside the seizure. The Adjudicating Authority gives further directions after adjudication.

  • Forgetting the threshold and the bring-back proviso.

    Students memorise only the timelines.

    Fix: Always add that no seizure is made below the prescribed value, and that disclosure and bringing the asset back can lead to setting aside of the seizure.

  • Stating a rupee figure for the threshold or saying compounding is available.

    Guessing to fill the answer.

    Fix: Say 'the value as prescribed'. Note that section 37A(6) states section 15 does not apply.

Worked examples

Example 1

Rohit, a resident in India, is suspected of holding immovable property abroad in breach of section 4 of FEMA. The Authorised Officer seizes an Indian bank balance of equal value. Explain the procedure that follows under section 37A and when the seizure can be set aside.

Show the solution
  1. Provision: section 4 bars a resident in India from acquiring, holding, owning, possessing or transferring foreign exchange, foreign security or immovable property outside India, save as the Act provides. Section 37A allows seizure of value equivalent situated in India where such holding is suspected, after the Authorised Officer records reasons in writing.
  2. Facts: the Authorised Officer has seized an Indian bank balance equal in value to the foreign property. This is permitted, provided the aggregate value of the foreign property is not below the prescribed value.
  3. Procedure: the order and relevant material must be placed before the Competent Authority, an officer not below Joint Secretary rank, within 30 days of seizure. The Competent Authority must decide within 180 days, after hearing the Directorate of Enforcement and Rohit, either confirming or setting aside the order.
  4. Setting aside: if Rohit discloses the property and brings it back into India, he may apply. After hearing him and the Directorate of Enforcement, the Competent Authority or Adjudicating Authority passes an appropriate order, which may include setting aside the seizure.
  5. Further remedy: if the Competent Authority confirms the seizure, Rohit may appeal to the Appellate Tribunal.

Answer: The seizure is valid if reasons were recorded and the value is not below the prescribed threshold. It must go to the Competent Authority within 30 days and be decided within 180 days. It can be set aside on disclosure and bringing the property back into India, or by the Competent Authority or Appellate Tribunal.

Example 2

An order of seizure under section 37A was passed on 1 March. Seizure was confirmed by the Competent Authority. State how long the confirmed seizure continues and who decides what happens next. Also state whether the person may seek compounding under section 15.

Show the solution
  1. Provision: under section 37A(4), the order of the Competent Authority confirming seizure of the equivalent asset continues till the disposal of adjudication proceedings.
  2. Next decision: once adjudication ends, the Adjudicating Authority passes appropriate directions in the adjudication order about further action on the seizure.
  3. Interaction with the proviso: at any stage, if the person discloses the foreign asset and brings it back into India, he can apply, and the seizure may be set aside after a hearing.
  4. Compounding: section 37A(6) says nothing in section 15 applies to this section. So compounding under section 15 is not available for section 37A.
  5. Appeal: the person aggrieved by the Competent Authority's order may appeal to the Appellate Tribunal.

Answer: The confirmed seizure continues until adjudication proceedings are disposed of. The Adjudicating Authority then gives directions in its adjudication order. Compounding under section 15 is not available under section 37A, but the person may appeal to the Appellate Tribunal.

Exam tips

  • Write the section 4 prohibition in one line before section 37A. Examiners reward the link between the two.
  • Learn the two numbers, 30 days and 180 days, and attach each to its correct step.
  • In case studies, identify who acts at each stage: Authorised Officer, Competent Authority, Adjudicating Authority, Appellate Tribunal.
  • Add the bring-back proviso and the exclusion of section 15 as the final points in a long answer.
  • If asked how section 37A differs from section 4, say section 4 prohibits holding; section 37A provides seizure of equivalent value in India. Mention section 13(1A) to (1D) for penalty and prosecution only if the question asks.

Practice questions from Setting up of Business outside India and Issues Relating thereto

Section 37A: Assets Held Abroad in Contravention of Section 4: frequently asked questions

What is section 37A of FEMA 1999?

It is a special provision on assets held outside India in contravention of section 4. It allows the Authorised Officer to seize value equivalent, situated in India, of such foreign exchange, foreign security or immovable property. The seizure is then reviewed by a Competent Authority.

How does section 37A differ from section 4?

Section 4 is the prohibition on a resident in India holding foreign exchange, foreign security or immovable property outside India, save as the Act provides. Section 37A is the enforcement procedure that lets authorities seize equivalent value in India when such holding is suspected.

Who is the Competent Authority under section 37A?

It is an authority appointed by the Central Government, who must be an officer not below the rank of Joint Secretary to the Government of India. The Authorised Officer places the seizure order before it within 30 days of seizure.

Can a seizure under section 37A be reversed?

Yes. The Competent Authority can set it aside after a hearing. Also, if the person discloses the asset and brings it back into India, an application can lead to the seizure being set aside. An order of the Competent Authority can be appealed to the Appellate Tribunal.