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

Meridian GmbH, a German firm, intends to open a branch office in Pune to carry on activities in India. Under section 6(6) of FEMA, what can the Reserve Bank do regarding such a branch, office or other place of business of a person resident outside India?

The Reserve Bank may, by regulation, prohibit, restrict or regulate the establishment in India of a branch, office or other place of business by a person resident outside India. This is a direct power under section 6(6), not just a registration function.

  1. AOnly register it without any power to restrict
  2. BProhibit, restrict or regulate its establishment by regulationCorrect
  3. CGrant it exemption from all FEMA provisions automatically
  4. DRegulate it only if the Central Government first issues a notification under section 47(3)

Explanation

Section 6(6) allows the Reserve Bank, by regulation, to prohibit, restrict or regulate the establishment in India of a branch, office or other place of business by a person resident outside India. It is therefore not limited to registration, and no prior notification under section 47(3) is required for this power.

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