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c18 Flashcards

1
Q

The British Government imposed exchange control in India under the ______________-, as part of their war efforts with a view to directing foreign exchange to nationally important objectives

A

Defence of India Rules on September 3, 1939

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2
Q

Subsequently, the _______________ was introduced after World War II, to ration the scarce Foreign Exchange for all external payments

A

Foreign Exchange Regulation Act (FERA), 1947

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3
Q

FERA, 1947 was replaced by

A

Foreign Exchange Regulation Act, 1973

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4
Q

Foreign Exchange Regulation Act, 1973 the purpose of which (as stated in the preamble to Act) was

A

“…. for the conservation of the foreign exchange resources of the country and the proper utilization thereof….”

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5
Q

The reform process also included the introduction of flexible exchange rate, starting with exchange rate adjustments in

A

July 1991.

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6
Q

introduction of Liberalised Exchange Rate Management System in

A

March 1992.

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7
Q

implementation of completely market determined exchange rate system by

A

March 1993.

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8
Q

To ensure that the foreign exchange laws or regulations are responding to the evolving economic situation, the Foreign Exchange Management Act (FEMA) was enacted in 1999 to replace FERA, 1973 with effect from

A

June 1, 2000.

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9
Q

FEMA, 1999 classifies all foreign exchange transactions into two broad categories viz

A

Current Account and Capital Account Transactions

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10
Q

A “current account transaction” is transaction other than a capital account transaction i.e., mostly of a revenue nature. Example

A

Exports, Imports, Personal remittances, Gift, Income etc

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11
Q

The definition of a resident as per FEMA, 1999 broadly includes a person residing in India for more than ____________ days in the preceding financial year;

A

182

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12
Q

In terms of _______________ Reserve Bank authorises entities designated as Authorised Persons to deal in foreign exchange which inter alia includes an Authorised Dealer or a Money Changer.

A

Section 10(1) of the FEMA, 1999

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13
Q

Authorised Dealer Category-I

A

Commercial Banks, State Cooperative Banks, Urban Cooperative Banks All current account transactions (unless restricted by Government in consultation with RBI) and permissible capital account transactions

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14
Q

Authorised Dealer Category-II

A

Existing FFMCs, Urban Cooperative Banks, Regional Rural Banks, Small Finance Banks, Payments Banks, Systemically Important Non-Deposit taking Non- Banking Financial Company -Investment and Credit Companies (NDSI-NBFC- ICCs) Specified non-trade related current account transactions as also all the activities permitted to Full Fledged Money Changers.

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15
Q

Authorised Dealer Category-III

A

Select financial and other institutions To carry out specific foreign exchange transactions incidental to their business / activities

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16
Q

Full Fledged Money Changers (FFMC)

A

Select registered companies Purchase of foreign exchange and sale of foreign exchange for private and business visits abroad

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17
Q

Reserve Bank also permits _______________to enter into franchisee (also referred as agency) agreements at their option for carrying on Restricted Money Changing business i.e., conversion of foreign currency notes, coins or travellers’ cheques into Indian Rupees

A

AD Cat – I Banks, AD Cat – II entities and FFMCs

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18
Q

In terms of _______________ any person contravening the provisions of FEMA, 1999 upon adjudication, be liable to a monetary penalty.

A

section 13 of FEMA, 1999

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19
Q

Compounding is a mechanism wherein

A

a contravention is regularized by way of voluntary admission and payment of amount imposed, by the person committing such contravention.

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20
Q

Any contravention [except that of section 3(a) of FEMA] may, on an application made by the person committing such contravention, be compounded by officers of RBI in exercise of powers conferred under section

A

section 15 of FEMA, 1999

21
Q

The process of compounding a contravention is undertaken by RBI on basis of the

A

Foreign Exchange (Compounding Proceedings) Rules, 2024

22
Q

Schedule I

A

Specifies transactions for which drawal of foreign exchange is prohibited such as remittance of lottery winnings, income from racing/riding etc., purchase of lottery tickets, banned magazines, sweepstakes, etc.

23
Q

Schedule II

A

Specifies transactions for which drawal of foreign exchange requires prior approval of the Government such as cultural tours, remittance of freight of vessel chartered by a PSU, etc.

24
Q

Schedule III

A

Specifies transactions for which drawal of foreign exchange requires prior approval of the Reserve Bank. For individuals, these transactions include drawal of foreign exchange above a certain monetary limit such as private visits to any country (except Nepal and Bhutan), gift or donation, emigration, maintenance of close relatives abroad, studies abroad etc. The limit for individuals is linked to the Liberalised Remittance Scheme (LRS). For non-individuals, the monetary limits are for remitting foreign exchange for consultancy services, donations etc.

25
Q

In addition to transactions mentioned in Schedule I, drawal of foreign exchange is also prohibited for travel to

A

Nepal or Bhutan or a transaction with a person resident in Nepal or Bhutan.

26
Q

NRO or Non-Resident Ordinary Rupee Account can be opened by

A

any non-resident

27
Q

NRE or Non-Resident (External) Rupee Account can be opened by

A

NRIs and PIO/OCIs

28
Q

Repatriation from NRO account is permissible only up to a limit of

A

USD 1 Million per financial year.

29
Q

_______________ Account can be opened by any non-resident having a business interest in India for putting through bona fide transactions in Rupees.

A

Special Non-Resident Rupee (SNRR)

30
Q

Special Non-Resident Rupee (SNRR) Account can be opened as a

A

current account without any interest payment and is denominated in Indian Rupees.

31
Q

FCNR(B) or Foreign Currency (Non-Resident) Account (Banks) can be opened by

A

NRIs and PIO/OCIs.

32
Q

FCNR(B) or Foreign Currency (Non-Resident) Account (Banks) can be opened as a

A

term deposit and in any freely convertible foreign currency

33
Q

Residents can open foreign currency denominated accounts in India such as

A

Exchange Earners Foreign Currency Account (EEFC), Resident Foreign Currency (Domestic) Account [RFC(D)], Resident Foreign Currency Account (RFC) etc.

34
Q

Foreign Direct Investment (FDI) implies

A

investment through capital instruments by a person resident outside India in an unlisted Indian company or in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

35
Q

Foreign Portfolio Investment (FPI) refers to any investment made by a person resident outside India through

A

equity instruments where such investment is less than ten percent of the post issue paid-up share capital on a fully diluted basis of a listed Indian company or less than ten percent of the paid-up value of each series of equity instruments of a listed Indian company.

36
Q

An NRI can purchase shares up to ___________ per cent of the paid-up capital of an Indian company on a fully diluted basis.

A

5

37
Q

All NRIs taken together cannot purchase more than _________ per cent of the paid-up value of the company.

A

10

38
Q

The aggregate limit of ten percent can be increased up to ___________- percent by passing a special resolution by the general body of the Indian company.

A

twenty four

39
Q

Person’s resident outside India is also permitted to invest in units of Investment Vehicles like

A

Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvIts) and Alternative Investment Funds (AIFs) regulated by Securities and Exchange Board of India

40
Q

External Commercial Borrowings (ECBs) are

A

loans and bonds raised from non-resident eligible lenders

41
Q

ECBs can be raised as

A

foreign currency denominated ECBs or Rupee denominated ECBs. ECBs can also be raised as FCCBs (Foreign Currency Convertible Bonds) and FCEBs (Foreign Currency Exchangeable Bonds).

42
Q

For Indian Entity the total FC shall not exceed ___________- of its net worth as on the date of the last audited balance sheet

A

4 times

43
Q

A listed Indian company may make OPI including by way of reinvestment within the limit of ___________ percent of its net worth as on the date of its last audited balance sheet.

A

50

44
Q

A Liaison Office

A

means a place of business to act as a communication channel between the principal place of business or Head Office or by whatever name called and entities in India, but which does not undertake any commercial/ trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel.

45
Q

A Branch Office in relation to a company, means

A

any establishment described as such by the company.

46
Q

A Project Office means

A

a place of business in India to represent the interests of the foreign company executing a project in India but excludes a Liaison Office.

47
Q

Under the Liberalised Remittance Scheme, Authorised Dealers may freely allow remittances by resident individuals up to the limit prescribed by RBI. Currently, _____________ per Financial Year (April-March) is the limit for any permitted current or capital account transaction or a combination of both.

A

USD 2,50,000

48
Q

An additional mechanism for settlement of trade transactions in INR to the existing mechanism to encourage trade payment and settlement in INR was introduced in July 2022 for invoicing, and effecting payment and settlement of exports/imports in INR by opening of

A

Special Rupee Vostro Account (SRVA

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