As per the “Foreign Exchange Management Act” notes, FEMA 1999 is an act of the Indian Parliament which revise the law that is related to the foreign exchange market. The main factor of FEMA 1999 is to develop and maintain the foreign exchange market of India and also promote the external trade payments as well. It is the formatting version of “Foreign Exchange Regulation Act” which was passed on 29th December, 1999. The Act has been made to deal with those types of offenses which are related to civil offenses. 

Overview of FEMA 1999

The Act 1999 is the modified version of “Foreign Exchange Management Act” which has become the pro liberalization policies of the Government of India. In the Foreign Exchange Management Notes it has been said that the FEMA 1999 has authorized a new type of foreign exchange management to emerge the regiment framework to regulate the financial transaction of foreign exchange. FEMA 1999 has the ability to empower the Reserve Bank of India who pass the regulations and also make it legal for the Indian Government to pass the rules of foreign exchange based on their policy. FERA was modified due to some problems such as it could not succeed as it failed to restrict the multinational corporation activities. However, in the FM notes ,it has been stated that the FERA Act could not benefit to compile foreign exchange policies of the Indian Government. The Management wanted to resolve the Act and the main motive for them is to avoid the risks of the foreign exchange trade. Thus the Foreign Exchange Management Act 1999 has been legalised to make the transaction level of external trade and to make it easier than FERA. 

Important factors of FEMA 1999

There are some main features of FEMA 1999 and that is described below, 

  • FEMA 1999 empowers the Indian Government to curb the payments for a person who is outside of India 
  • It has been ruled after emerging FEMA 1999 that all the financial transactions cannot be sent without the approval of the stated Act and all the transaction needs to be passed out from an authorized person within high security system
  • The Indian Government can restrict authorized account of the general public who deals with the foreign exchange currency from their general account 
  • The FEMA 1999 has also given power to Reserve Bank of India to restrict the transaction from the capital account of the general people and to carry out the financial transaction  from the authorized person 
  • In the Act, it has been clearly mentioned that the residents of India have the permission to organize the foreign exchange trade and as per the foreign exchange transaction security board, it has the right to hold the house and property of a person who is out of the country or the person is staying out of the country

Sub divisions of FEMA 1999

There are two types of categories and it is looked after by the authorized person of Government of India. 

Category no 1:  Commercial banks, State banks and the Urban banks come under category one. The main task of this section is to look after the financial transactions of the foreign exchange trade.

Category no 2: RBI has been authorized to pass out the transaction over the financial accounts of those persons who buy the foreign exchange sale for the business purpose abroad. The RBI has the power to control the foreign exchange trade. 

FEMA notes 

The main components of the Act 1999 to control over the realizations of the exporting the procedure so that the authorized person can deal with the foreign exchange. Only the authorized person has the power to deal with foreign exchange money for selling the foreign withdrawals from the approval of the Reserve Bank of India. However, any person can sell the foreign exchange trade and they inform the RBI immediately or later. So, it can be stated that the impact  of FEMA has influenced the Indian economy in a positive way.

Conclusion 

It can be concluded that FEMA is the modified version of the FERA Act as the old version has many problems and many types of unusual offense found in those acts. The FEMA 1999 has the legal power to control the transaction of the foreign exchange trade and there are many factors that have been evaluated as well.