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CS Executive · Capital Market and Securities Laws · International Financial Services Centres Authority (IFSCA)

Meridian Securities, a broker operating in GIFT City IFSC, is fined by IFSCA for a contravention. Under the IFSCA Act, 2019, how must the penalty be collected and what happens to the amount realised?

Penalties are collected in the foreign currency equivalent of the amount imposed, using the RBI-notified exchange rate on the order date. The sums realised are then credited to the Consolidated Fund of India in Indian rupees, not to the IFSCA's own Fund.

  1. ACollected in Indian rupees and credited to the IFSCA Fund
  2. BCollected in the foreign currency equivalent and credited to the IFSCA Fund
  3. CCollected in the foreign currency equivalent and the sums realised are credited to the Consolidated Fund of India in Indian rupeesCorrect
  4. DCollected in Indian rupees and credited to the Consolidated Fund of India in foreign currency

Explanation

Penalties, fines, fees and settlement amounts are collected in the foreign currency equivalent of the penalty imposed, at the RBI-notified rate on the date of the order. All sums realised by way of penalties or fines are credited to the Consolidated Fund of India in Indian rupees, not to the IFSCA Fund. Hence option 1 and option 2 wrongly send them to the IFSCA Fund.

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