Skip to content

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

Kiran Textiles Ltd, an Indian company, has a foreign currency account balance with an authorised dealer and wishes to deal with a person who is not an authorised person to buy foreign exchange. Under FEMA, 1999, which statement correctly reflects the legal position?

Under FEMA, no person may deal in or transfer foreign exchange or foreign security to anyone who is not an authorised person, except as the Act, rules or regulations allow. A board resolution, small value or fee does not create an exemption.

  1. AAny resident may deal in foreign exchange with anyone, provided the amount is small
  2. BExcept as provided in the Act, rules or regulations, no person shall deal in or transfer foreign exchange or foreign security to any person not being an authorised personCorrect
  3. CDealing with a non-authorised person is permitted if the company's board passes a resolution
  4. DDealing is allowed only on payment of a prescribed fee to the RBI

Explanation

FEMA provides that, unless otherwise provided, no person shall deal in or transfer foreign exchange or foreign security to anyone who is not an authorised person. A board resolution or a small amount does not override this. Payment of a fee is not an exception.

Did you get it right without looking?

One question tells you little. A timed set on The Foreign Exchange Management Act, 1999 shows your real accuracy, how long you take and where you lose marks.

Practise The Foreign Exchange Management Act, 1999Free diagnostic mock

More The Foreign Exchange Management Act, 1999 questions