BANKING AFFAIRS

Detailed explanation-1: -Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence and would now be treated as a civil offence and the Enforcement Directorate would no longer have the power to arrest persons for such offences.

Detailed explanation-2: -Notes: FEMA was introduced because the FERA did not fit in with the Post-Liberalization Policy. It made all offence regarding Foreign Exchange Civil Offence, as opposed to criminal offences as dictated by FERA.

Detailed explanation-3: -The main change that the FEMA has brought in is that FEMA is a civil law, whereas the FERA was a criminal law.

Detailed explanation-4: -Compounding is the voluntary admission of a violation of any of the provisions of the FEMA Act of 1999 or the rules/regulations/notifications/orders/directions, or circulars issued under the Act. Individuals violate the provisions by admitting their own inaccuracy and requesting compounding to legalise their actions.

Detailed explanation-5: -Penalties for contraventions under FEMA are per se monetary in nature. If any person contravenes any provisions, rules, regulations, etc. the penalty imposed can be up to 3 times of the sum involved in contravention; and if the sum of contravention is not ascertainable, penalty can be up to ₹ 200, 000.