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CS Executive · Economic, Commercial and Intellectual Property Laws · Overseas Direct Investment

Under section 6 of FEMA, 1999, who may specify the classes of capital account transactions that are permissible, where those transactions do NOT involve debt instruments?

The Central Government, in consultation with the Reserve Bank, prescribes permissible capital account transactions that do not involve debt instruments, along with their limits and conditions, under section 6(2A). The Reserve Bank's own specification power under section 6(2) relates to transactions involving debt instruments.

  1. AThe Reserve Bank alone, without consulting anyone
  2. BThe Central Government, in consultation with the Reserve Bank, by prescribing themCorrect
  3. CThe Adjudicating Authority appointed under section 16
  4. DThe Special Director (Appeals)

Explanation

Section 6(2A) says the Central Government may, in consultation with the Reserve Bank, prescribe the permissible classes of capital account transactions not involving debt instruments, their limits and conditions. The Reserve Bank's power under section 6(2) concerns transactions involving debt instruments. Option A therefore reverses the allocation.

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