Full formLaw & Legal
FEMAstands forForeign Exchange Management Act
Full Form of FEMA
What is FEMA?
The Foreign Exchange Management Act (FEMA) is an Indian legislation enacted in 1999 to consolidate and amend the laws relating to foreign exchange with the objective of facilitating external trade and payments, promoting the orderly development and maintenance of the foreign exchange market in India. It replaced the earlier Foreign Exchange Regulation Act (FERA) of 1973, which was more restrictive. FEMA is administered by the Reserve Bank of India (RBI) and the central government, and it governs all foreign exchange transactions, including those involving cross-border trade, investments, loans, and remittances. The act classifies transactions into current account and capital account, with different levels of liberalization. It is widely used by businesses, individuals, banks, and authorized dealers for international financial dealings. FEMA aims to manage foreign exchange reserves efficiently and encourage foreign investment while preventing money laundering and illegal capital flight. The act is a crucial topic for competitive exams such as UPSC, RBI Grade B, SEBI, and banking exams, where questions on its provisions, differences from FERA, and penalties for violations often appear. Understanding FEMA is essential for professionals in finance, law, and international business.
FEMA का फुल फॉर्म
विदेशी मुद्रा प्रबंधन अधिनियम
Example
Under FEMA, Indian residents can now remit up to $250,000 per financial year for permissible current account transactions without prior RBI approval.
FEMA — frequently asked questions
What is the full form of FEMA?
The full form of FEMA is the Foreign Exchange Management Act.
How is FEMA different from FERA?
FERA was a strict control-oriented law enacted in 1973, while FEMA replaced it in 1999 with a more liberal, management-oriented approach focused on facilitating foreign trade and investment.
Who administers FEMA in India?
FEMA is administered by the Reserve Bank of India (RBI) and the central government, with the RBI issuing rules and regulations under the act.