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

Under FEMA, 1999, which authority determines which instruments are 'debt instruments' for the purposes of section 6, the line separating the Reserve Bank's regulation from the non-debt instruments rules?

The Central Government determines them, in consultation with the Reserve Bank. Section 6(7) defines debt instruments as instruments so determined, and section 46(2)(aa) allows the Central Government to notify them through rules. This determination decides whether a transaction falls under Reserve Bank regulation or under Central Government rules.

  1. AThe Reserve Bank, acting alone through regulations
  2. BThe Central Government, in consultation with the Reserve BankCorrect
  3. CThe Appellate Tribunal, in consultation with the Central Government
  4. DThe authorised person, with the approval of the Reserve Bank

Explanation

Section 6(7) says 'debt instruments' means such instruments as may be determined by the Central Government in consultation with the Reserve Bank. Section 46(2)(aa) lets rules specify these instruments. The Reserve Bank does not decide this alone.

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