The Full Form of ‘FERA’ in Banking is ‘Foreign Exchange Regulation Act’.
Full Form of FERA
The full form of FERA in banking is the Foreign Exchange Regulation Act. This act was enacted in 1973 by the government of India to regulate and control foreign exchange transactions in India. It also aimed to stop any illegal activities related to foreign exchange trading or investments.
The objective of the FERA was to ensure that all foreign exchange transactions were conducted through authorized dealers, and that the foreign exchange earned from exports was used for the development of India. The FERA also aimed to protect the Indian rupee from being devalued due to large-scale outflows of funds from India.
Under the FERA, all dealings involving foreign exchange had to be done through authorized dealers, and it was made mandatory for every person who wanted to deal in foreign exchange to obtain a license from an authorized dealer. All foreigners were required to surrender their foreign currency holdings in India upon leaving the country. The Reserve Bank of India (RBI) was given complete control over the regulation of foreign exchange transactions through this act.
Foreigners were not allowed to engage in direct investment activities such as shareholding and management of companies in India, while non-resident Indians (NRIs) could do so with permission from RBI or Ministry of Finance (MoF). Similarly, Indian citizens were prohibited from investing abroad without permission from RBI or MoF. The import and export of goods into/from India could only be done with prior permission from RBI or MoF under certain specified conditions.
The FERA also gave powers for search and seizure operations by officers appointed under this act if any violation was found in respect of any provision under this act or rules framed thereunder. Offenders can be punished with a term up to 5 years along with monetary fines up 1000 rupees or three times the amount involved whichever is higher as per Section 22(2), depending on nature and severity of offense committed.
In 1998, FERA was replaced by FEMA (Foreign Exchange Management Act) which is much more liberal compared to FERA as it provides freedom for residents and non-residents alike within limits prescribed by RBI for carrying out current account transactions like payments towards trade remittances etc., while capital account transactions are still restricted under FEMA but with relaxation on some accounts like NRI investments etc., compared with restrictions imposed by FERA earlier.
Though FEMA has replaced FERA, its provisions are still applicable on certain offenses committed under FERA prior to 1st June 2000 when it came into effect replacing FERA officially .
Queries Covered Related to “FERA”
- What is the full form of FERA in Banking?
- Explain full name of FERA.
- What does FERA stand for?
- Meaning of FERA