Page 212 - DMGT401Business Environment

Unit 9: Foreign Exchange Management

9.1 Foreign Exchange Regulation Act Notes

FERA is an Act to consolidate and amend the law regulating certain payments, dealings in
foreign exchange and securities, transactions indirectly affecting foreign exchange and the import
and export of currency, for the conservation of the foreign exchange resources of the country and
the proper utilisation thereof in the interests of the economic development of the country.
9.1.1 Application of the Act

1. This Act may be called the Foreign Exchange Regulation Act, 1973.
2. It extends to the whole of India.
3. It applies also to all citizens of India outside India and to branches and agencies outside
India of companies or bodies corporate, registered or incorporated in India.
4. It shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint in this behalf.

Provided that different dates may be appointed for different provisions of this Act and any
reference in any such provision to the commencement of this Act shall be construed as a reference
to the coming into force of that provision.

9.1.2 Some Important Provisions of the Act

1. "Authorised dealer" means a person for the time being authorised under section 6 to deal
in foreign exchange;
2. "Bearer certificate" means a certificate of title to securities by the delivery of which (with
or without endorsement) the title to the securities is transferable;
3. "Certificate of title to a security" means any document used in the ordinary course of
business as proof of the possession or control of the security, or authorising or purporting
to authorise, either by an endorsement or by delivery, the possessor of the document to
transfer or receive the security thereby represented;
4. "Coupon" means a coupon representing dividends or interest on a security;
5. The provisions of F.E.R. (Amendment) Act, 1993 (hereafter referred to as Act 29 of 1993)
came into force on the 8th day of January 1993.
6. "Currency" includes all coins, currency notes, banks notes, postal notes, postal orders,
money orders, cheques, drafts, traveler's cheques, letters of credit, bills of exchange and
promissory notes;
7. "Foreign currency" means any currency other than Indian currency;
8. "Foreign exchange" means foreign currency and includes -

(a) all deposits, credits and balances payable in any foreign currency, and any drafts,
traveler's cheques, letters of credit and bills of exchange, expressed or drawn in
Indian currency but payable in any foreign currency;
(b) any instrument payable, at the option of the drawee or holder thereof or any other
party thereto, either in Indian currency or in foreign currency or partly in one and
partly in the other;

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