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

Sunil, a resident in India, wants to act as a money changer in Mumbai. Under FEMA, 1999, which of the following is correct?

Only a person authorised by the Reserve Bank of India, an authorised person such as an authorised dealer or money changer, may deal in or transfer foreign exchange. Sunil therefore cannot act as a money changer without RBI authorisation, and the authorisation is not limited to companies.

  1. AAnyone may deal in foreign exchange freely without any permission
  2. BOnly a person authorised by the Reserve Bank, called an authorised person, may deal in or transfer foreign exchange or act as a money changerCorrect
  3. COnly the Central Government itself may deal in foreign exchange
  4. DOnly companies may become authorised persons, not individuals or firms

Explanation

Section 10 permits only an authorised person, authorised by the RBI, to deal in or transfer foreign exchange or foreign security, including as authorised dealer, money changer or offshore banking unit. The RBI authorises persons, including individuals and firms. Hence Sunil needs RBI authorisation.

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