BANKING AFFAIRS

Detailed explanation-1: -Parliament of India enacted the Foreign Exchange Management Act (FEMA) on 29 December 1999 replacing FERA. FERA came into force from January 1, 1974. FEMA came into force from June 2000. FERA was conceived with the notion that Foreign Exchange is a scarce resource.

Detailed explanation-2: -Finally, in 1999 the FEMA was passed which replaced the FERA, though certain provisions of FERA 1973 still exist under FEMA 1999. To promote of an orderly maintenance of the foreign exchange market In India. Regulation of foreign capital in India. To remove imbalance of payment.

Detailed explanation-3: -It was introduced at a time when the foreign reserves of the country were satisfactory. Its main aim was to manage the foreign exchange to promote and facilitate growth. FERA was related to restricting and regulating foreign exchange while FEMA was enacted to manage the foreign exchanges.

Detailed explanation-4: -Foreign Exchange Regulation Act (FERA) 1973 was replaced by FEMA 1999(Foreign Exchange management act).

Detailed explanation-5: -Provisions on IT were introduced under the FEMA Act. Violation of the provisions of FERA has been considered a criminal offence and the punishment for contravention was imprisonment. Violation of the provisions of FEMA has been considered a civil offence and the punishment for contravention was a monetary penalty.