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

Kapoor Industries Ltd has an overseas joint venture in Singapore and wishes to draw foreign exchange for repaying instalments of a loan taken for it. Which statement is correct under section 6 of FEMA, 1999?

The proviso to section 6(2) says the Reserve Bank or the Central Government shall not impose restrictions on drawal of foreign exchange for payment due on amortisation of loans or for depreciation of direct investments in the ordinary course of business.

  1. AThe Reserve Bank may restrict the drawal for loan amortisation in the ordinary course of business
  2. BThe Reserve Bank or the Central Government shall not impose restrictions on drawal of foreign exchange for payment due on amortisation of loans or depreciation of direct investments in the ordinary course of businessCorrect
  3. CThe Adjudicating Authority must approve each amortisation payment
  4. DDrawal is allowed only up to a limit fixed by the Special Director (Appeals)

Explanation

The proviso to section 6(2) bars the Reserve Bank and the Central Government from restricting drawal of foreign exchange for amortisation of loans or depreciation of direct investments in the ordinary course of business. Option A contradicts this. The other officers named have no role in this.

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