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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions

Which statement correctly describes the role of authorised persons under FEMA in the context of foreign funding?

Authorised persons, mainly authorised dealer banks, are permitted by the Reserve Bank to deal in foreign exchange and process inward and outward remittances. They act within RBI directions and cannot override them or adjudicate contraventions.

  1. AAuthorised persons are the only entities allowed to invest in Indian securities
  2. BAuthorised persons, such as authorised dealer banks, are permitted by the Reserve Bank to deal in foreign exchange and to handle foreign inward and outward remittances within the frameworkCorrect
  3. CAuthorised persons are appointed by SEBI to adjudicate FEMA contraventions
  4. DAuthorised persons can override the Reserve Bank's directions on capital account transactions

Explanation

Under FEMA the RBI may authorise persons such as authorised dealers, money changers and off-shore banking units to deal in or transfer foreign exchange. They operate within RBI directions, for example while processing inward remittances for foreign investment. They do not adjudicate contraventions or override RBI directions.

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