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CS Executive · Economic, Commercial and Intellectual Property Laws · Foreign Direct Investments - Regulations and Policy

Meridian Agro Pvt Ltd, an Indian company, wants to know which authority prescribes the permissible classes of capital account transactions that do NOT involve debt instruments, along with limits and conditions. Under FEMA, 1999 as amended, who does this?

The Central Government, in consultation with the Reserve Bank, prescribes permissible classes of capital account transactions not involving debt instruments, together with the limits and conditions. The Reserve Bank's own specifying power under the Act is confined to transactions involving debt instruments.

  1. AThe Central Government, in consultation with the Reserve BankCorrect
  2. BThe Reserve Bank alone, without consulting anyone
  3. CThe Adjudicating Authority under FEMA
  4. DThe Special Director (Appeals)

Explanation

Section 6(2A) empowers the Central Government, in consultation with the Reserve Bank, to prescribe permissible classes of capital account transactions not involving debt instruments, their limits and conditions. The Reserve Bank's role in section 6(2) relates to debt instruments, so option B is wrong.

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