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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Under Section 6 of FEMA, who prescribes the permissible classes of capital account transactions that do NOT involve debt instruments, such as certain equity investments?

The Central Government prescribes them, in consultation with the Reserve Bank. Section 6(2A) covers capital account transactions not involving debt instruments, while Section 6(2) gives the Reserve Bank the power, in consultation with the Central Government, for those involving debt instruments.

  1. AThe Reserve Bank alone, without consulting anyone
  2. BThe Central Government, in consultation with the Reserve BankCorrect
  3. CThe Appellate Tribunal
  4. DThe Authorised Officer under Section 37A

Explanation

Section 6(2A) empowers the Central Government, in consultation with the Reserve Bank, to prescribe classes of capital account transactions not involving debt instruments, along with limits and conditions. The Reserve Bank, in consultation with the Central Government, handles those involving debt instruments under Section 6(2).

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