What is FERA?
FERA stands for the Foreign Exchange Regulation Act. It was an Indian law that regulated foreign exchange and payments in the country. FERA was enacted in 1973 to control certain aspects of foreign trade and payments and to conserve the foreign exchange reserves of India. FERA was primarily aimed at regulating foreign exchange transactions. It controlled the flow of foreign currency in and out of India, as well as the holding of foreign currency by residents.
Key Characteristics of FERA:
- Stringent Controls: FERA imposed stringent controls and regulations on various aspects of foreign exchange dealings, including transactions, investments, and remittances.
- Enforcement Mechanisms: FERA empowered authorities to enforce its regulations through measures such as inspections, investigations, and penalties for non-compliance. Violators could face severe penalties, including fines and imprisonment.
- Conservation of Foreign Exchange Reserves: One of the main objectives of FERA was to conserve India’s foreign exchange reserves and prevent their depletion. It aimed to achieve this by regulating foreign exchange transactions and preventing activities that could lead to excessive outflows of foreign currency.
Difference between FERA and FEMA
FERA and FEMA are two sets of rules for managing money coming in and going out of a country. FERA started in 1973, was all about strict control over foreign money to protect India’s savings. Then, in 1999, FEMA came along, making things simpler and more open. Understanding the differences between FERA and FEMA is like peeking into how India’s economy changed over time to connect more with the rest of the world.
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