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Unit 3: FEMA Act, 1999

3.1 Definition under the Act Notes
Authorised Person. It means an authorised dealer, money changer, offshore banking unit or any
other person for the time being authorised under the Act to deal in foreign exchange or foreign
securities.

Capital account transaction. It means a transaction which alters the assets or liabilities, including
contingent liabilities, outside India or assets or liabilities in India of persons resident outside
India, and includes transactions referred to in Sec.6(3).

Currency. This expression includes all currency notes, postal notes, postal orders, money orders,
cheques, drafts, travellers’ cheques, letters of credit, bills of exchange and promissory notes,

credit cards or such other similar instrument as may be notified by the Reserve Bank. Vide
Notification No. FEMA 15/2000/RB dated May 3, 2000, RBI has notified ‘debit cards’, ‘ATM’

cards or any other instrument by whatever name called that can be used to create a fi nancial
liability, as ‘currency’.
Currency notes. It means and includes cash in the form of coins and bank notes.
Currency account transaction. It means a transaction, other than a capital account transaction
and without prejudice to the generality of the foregoing, such transaction includes—(i) payments
due in connection with foreign trade, other current business, services and short term banking
and credit facilities in the ordinary course of business; (ii) payments due as interest on loans
and as net income from investments; (iii) remittances for living expenses of parents, spouse and
children residing abroad; and (iv) Expenses in connection with foreign travel, education and
medical care of parents, spouse and children.

Export. ‘Export’ with its grammatical variations and cognate expressions, means. (i) the taking
out of India to a place outside India any goods, (ii) provision of services from India to any persons
outside India.

Foreign currency. It means any currency other than Indian currency.
Foreign security. The expression means any security, in the form of shares, stocks, bonds,
debentures, or any other instrument denominated or expressed in foreign currency and includes
securities expressed in foreign currency, but where redemption or any form of return such as
interest or dividend is payable in Indian currency.
Indian currency. It means currency which is expressed or drawn in Indian rupees but does not
include special bank notes and special one rupee notes issued under Sec.28A of the Reserve Bank
of India Act, 1934.

Person resident outside India. It means a person who is not resident in India.
Transfer. The expression ‘transfer’ includes sale, purchase, exchange, mortgage, pledge, gift, loan
or any other form of transfer or right, title, possession or lien.
Definitions of certain other terms used under FEMA Regulations are:

Non-resident Indian (NRI). It means a person resident outside India who is a citizen of India or
is a person of Indian origin.
Overseas Corporate Body (OCB). The expression means a company, partnership fi rm, society
and other corporate body owned directly or indirectly to the extent of at least 60 per cent by
non-resident Indians. Further, the expression includes overseas trusts in which not less than 60

per cent beneficial interest is held by non-resident Indians directly or indirectly but irrevocably.
Person of Indian Origin (PIO). It means a citizen of any country other then Bangladesh or
Pakistan, if
(a) he at any time held Indian passport; or

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