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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

Under Section 6 of the Foreign Exchange Management Act, 1999, which authority specifies, in consultation with the Central Government, the classes of capital account transactions involving debt instruments that are permissible, along with limits and conditions? This framework governs FCCB-type borrowings.

The Reserve Bank, acting in consultation with the Central Government, specifies permissible classes of capital account transactions involving debt instruments, the limits for foreign exchange and conditions under Section 6(2) of FEMA. The Central Government prescribes for non-debt instrument transactions under Section 6(2A).

  1. AThe Central Government alone, without consulting anyone
  2. BThe Reserve BankCorrect
  3. CThe Securities and Exchange Board of India
  4. DThe National Company Law Tribunal

Explanation

Section 6(2) of FEMA provides that the Reserve Bank may, in consultation with the Central Government, specify permissible classes of capital account transactions involving debt instruments, the limit of foreign exchange admissible and any conditions. Section 6(2A) gives the Central Government, in consultation with the Reserve Bank, the role for transactions not involving debt instruments. SEBI and the NCLT have no such role under this section.

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