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Unit 7: KYC Norms and Anti Money Laundering




               Debit/Credit Cards                                                               Notes
               EFT/ECS etc.
               Telephone Banking

               Internet Banking
          Some cautions


               'One size fits all' be avoided
               Maintain database, study customers behaviours and needs
               Manage risks properly
               Improve appraisal technique

               Transform weak collection strategies
               Improve MIS through technology

          7.6 Introduction of Foreign Exchange Management Act (FEMA)

          FEMA has stipulated a transition period of two years for replacing FERA by FEMA. After the
          expiry of two years from the date of enforcement of FEMA, i.e., w.e.f. 01.06.2002, any Court or
          Adjudicating Authority would not try any offence under FEMA.
          Section 49(3), FEMA holds that notwithstanding anything contained in any other law for the
          time being in force, no court shall take notice of any contravention under Section 51 of the
          repealed Act after the expiry of a period of two years from the date of the commencement of this
          Act.
          FERA contained 81 sections (some were deleted by 1993 amendment), out of which 32 sections
          were relating to the operational part and the rest were rating to penalties, Enforcement Directorate
          etc.
          FEMA with 49 sections has been divided into seven chapters. The first three chapters
          (Chapters (i), (ii) and (iii) with 12 sections) relate to operational part and the balance four
          chapters (Chapters (iv) to (vii) with sections 13 to 49) deal with penalties, adjudication, appeals,
          Enforcement Directorate etc.


             Did u know? FEMA has stipulated a transition period of two years for replacing FERA by
             FEMA.

          7.7 Residential Status


          Section 2(v) of FEMA provide: "person resident in India" means:

          1.   A person residing in India for more than one hundred and eighty two days during the
               course of the preceding financial year but does not include -
                    A person who was gone out of India, or who stays outside India, in either case:
                    (a)  for or on taking up employment outside India, or
                    (b)  for carrying on outside India a business or vocation outside India, or




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