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CS Executive · Economic, Commercial and Intellectual Property Laws · Overseas Direct Investment

During an inspection of an authorised dealer bank under Section 12 of FEMA, the RBI officer asks the bank's directors to produce books and documents relating to overseas investment remittances. Which statement is correct?

The inspecting officer must be specially authorised in writing by the Reserve Bank, and every director or officer of a company authorised person must produce books, accounts and documents and furnish the information required, within the time and manner the officer directs, under Section 12.

  1. AOnly the Reserve Bank governor can require production of documents
  2. BThe inspection can be done only once a year
  3. CThe inspecting officer must be specially authorised in writing, and every director or officer of a company authorised person must produce books and furnish information as directedCorrect
  4. DDirectors need not produce documents because only the company is liable

Explanation

Section 12(1) lets the Reserve Bank cause an inspection at any time by an officer specially authorised in writing. Section 12(2) makes it the duty of the authorised person and, for a company, every director or officer, to produce books, accounts and documents and give information. No annual limit exists, and directors are personally bound.

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