RBI’s key responsibilities under FEMA are as follows:

  • Controlling foreign exchange deals by granting general or particular permission, with the exception of circumstances where explicit provisions have been provided in the Act, Rules, or Regulations – Section 3 of FEMA.
  • The Reserve Bank of India (RBI) has no authority to impose limits on current account transactions. Only the Central Government, in collaboration with the RBI, can impose these restrictions by virtue of Section 5 of FEMA. Foreign Exchange Management (Current Account Transactions) Rules, 2000, provide that in some situations, prior RBI permission is necessary for current account transactions.
  • Specifying payment criteria for capital account transactions – Section 6 (2) of FEMA.
  • Issue regulations to regulate, prohibit, or restrict the following:
  • Foreign security is transferred or issued to residents, and Indian security is transferred or issued to non-residents.
    Borrowing and lending in foreign currency or to a foreign individual;
    Currency or currency notes export/import;
    Transfer of immovable property from India to another country;
    Giving a guarantee or guaranty in the case of a foreign currency transaction – Section 6 (3)
  • Define the period and method in which foreign exchange due from the export of goods and services should be received (by regulation) – Section 8 of FEMA.
  • Exemption from realization and repatriation in the conditions listed in Section 9 of FEMA.
  • Authorizing ‘Authorized Person’ to deal in foreign exchange, by giving them instructions, and inspecting the authorized person – Sections 10, 11 & 12.