Foreign Exchange Regulation

Foreign Exchange Regulation

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 utilization thereof in the interests of the economic development of the country.
BE it enacted by Parliament in the Twenty-fourth Year of the Republic of India as follows :-
¾ Short title, extent, application and commencement
¾ This Act may be called the Foreign Exchange Regulation Act, 1973.
¾ It extends to the whole of India.
¾ 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.
¾ It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf:
¾ 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.

Definitions

In this Act, unless the context otherwise requires, –
¾ Appellate Board” means the Foreign Exchange Regulation Appellate Board constituted by the Central Government under sub-section(1)of section 52;
¾ authorized dealer” means a person for the time being authorized under section 6 to deal in foreign exchange;
¾ 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;
¾ 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 authorizing or purporting to authorize, either by an endorsement or by delivery, the possessor of the document to transfer or receive the security thereby represented;
¾ coupon” means a coupon representing dividends or interest on a security; 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.
¾ 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;
¾ foreign currency” means any currency other than Indian currency;
¾ foreign exchange” means foreign currency and includes –
¾ 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;
¾ 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;
¾ foreign security” means any security created or issued elsewhere than in India, and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in India;
¾ Indian currency” means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one-rupee notes issued under section 28A of the Reserve Bank of India Act, 1934;
¾ Indian custom waters” means the waters extending into the sea to a distance of twelve nautical miles measured from the appropriate base line on the coast of India and includes any bay, gulf, harbor, creek or tidal river;
¾ money-changer” means a person for the time being authorized under section 7 to deal in foreign currency;
¾ overseas market”, in relation to any goods, means the market in the country outside India and in which such goods are intended to be sold;
¾ owner”, in relation to any security, includes any person who has power to sell or transfer the security, or who has the custody thereof or who receives, whether on his own behalf or on behalf of any other person, dividends or interest thereon, and who has any interest therein, and in a case where any security is held on any trust or dividends or interest thereon are paid into a trust fund, also includes any trustee or any person entitled to enforce the performance of the trust or to revoke or vary, with or without the consent of any other person, the trust or any terms thereof, or to control the investment of the trust moneys;
¾ person resident in India” means –
¾ a citizen of India, who has, at any time after the 25th day of March, 1947, been staying in India but does not include a citizen of India who has gone out of, or stays outside, India, in either case—
¾ for or on taking up employment outside India, or
¾ for carrying on outside India a business or vocation outside India, or
¾ for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
¾ a citizen of India, who having ceased by virtue of paragraph (a) or paragraph (b) or paragraph
(c) of sub-clause (I) to be resident in India, returns to, or stays in, India, in either case –
¾ for or on taking up employment in India, or
¾ for carrying on in India a business or vocation in India, or
¾ for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
¾ a person, not being a citizen of India, who has come to, or stays in, India, in either case –
¾ for or on taking up employment in India, or
¾ for carrying on in India a business or vocation in India, or
¾ for staying with his or her spouse, such spouse being a person resident in India, or
¾ for any other purposes, in such circumstances as would indicate his intention to stay in India for an uncertain period;
¾ a citizen of India, who, not having stayed in India at any time after the 25th day of March, 1947, comes to India for any of the purposes referred to in paragraphs (a), (b) and (c) of sub-clause (iii) or for the purpose and in the circumstances referred to in paragraph (d) of that sub-clause or having come to India stays in India for any such purpose and in such circumstances.
¾ Explanation – A person, who has, by reason only of paragraph (a) or paragraph (b) or paragraph (d) of sub-clause (iii) been resident in India, shall, during any period in which he is outside India, be deemed to be not resident in India;
¾ Person resident outside India” means a person who is not resident in India;
¾ Precious stone” includes pearl and semi-precious stone and such other stone or gem as the Central Government may for the purposes of this Act, notify in this behalf in the Official Gazette;
¾ “Prescribed” means prescribed by rules made under this Act;
¾ Reserve Bank” means the Reserve Bank of India;
¾ security” means shares, stocks, bonds, debentures, debenture stock, Government securities as defined in the Public Debt Act, 1944, savings certificates to which the Government Savings Certificates Act, 1959 applies, deposit receipts in respect of deposits of securities, and units or sub-units of unit trusts and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes;
¾ Transfer”, in relation to any security, includes transfer by way of loan or security. Classes of officers of Enforcement