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

Under FEMA, which of the following is subject to the proviso that neither the Reserve Bank nor the Central Government shall impose restrictions on drawal of foreign exchange for it?

Restrictions cannot be imposed on drawal of foreign exchange for payment due on amortisation of loans or depreciation of direct investments in the ordinary course of business. This protects routine servicing of loans and direct investments from capital account controls.

  1. APayment due on amortisation of loans or depreciation of direct investments in the ordinary course of businessCorrect
  2. BPurchase of immovable property abroad by a resident
  3. CPayment of any amount to a non-resident without limit
  4. DOpening a foreign branch by a resident company

Explanation

The proviso to section 6(2) bars restrictions on drawal of foreign exchange for payment due on amortisation of loans or for depreciation of direct investments in the ordinary course of business. The other items are not covered by this proviso.

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