Dealing in foreign exchange, etc.
3. Save as otherwise provided in this Act, rules or regulations made
thereunder, or with the general or special permission of the Reserve
Bank, no person shallâ
(a) deal in or transfer any foreign exchange or foreign security to
any person not being an authorised person;
(b) make any payment to or for the credit of any person resident
outside India in any manner;
(c) receive otherwise through an authorised person, any payment by
order or on behalf of any person resident outside India in any manner;
Explanation.â For the purpose of this clause,
where any person in, or resident in, India receives any payment by
order or on behalf of any person resident outside India through any
other person (including an authorised person) without a corresponding
inward remittance from any place outside India, then, such person
shall be deemed to have received such payment otherwise than through
an authorised person;
(d) enter into any financial transaction in India as consideration
for or in association with acquisition or creation or transfer of a
right to acquire, any asset outside India by any person.
Explanation.âFor the purpose of this clause, "financial
transaction" means making any payment to, or for the credit of
any person, or receiving any payment for, by order or on behalf of any
person, or drawing, issuing or negotiating any bill of exchange or
promissory note, or transferring any security or acknowledging any
debt.
Holding of foreign exchange, etc.
4. Save as otherwise provided in this Act, no person resident in
India shall acquire, hold, own, possess or transfer any foreign
exchange, foreign security or any immovable property situated outside
India.
Current account transactions.
5. Any person may sell or draw foreign exchange to or from an
authorised person if such sale or drawal is a current account
transaction:
Provided that the Central Government may, in public interest and in
consultation with the Reserve Bank, impose such reasonable
restrictions for current account transactions as may be prescribed.
Capital account transactions.
6. (1) Subject to the provisions of sub-section (2), any person may
sell or draw foreign exchange to or from an authorised person for a
capital account transaction.
(2) The Reserve Bank may, in consultation with the Central
Government, specifyâ
(a) any class or classes of capital account transactions which are
permissible;
(b) the limit up to which foreign exchange shall be admissible for
such transactions :
Provided that the Reserve Bank shall not impose any restriction on
the drawal of foreign exchange for payments due on account of
amortization of loans or for depreciation of direct investments in the
ordinary course of business.
(3) Without prejudice to the generality of the provisions of
sub-section (2), the Reserve Bank may, by regulations, prohibit,
restrict or regulate the followingâ
(a) transfer or issue of any foreign security by a person resident
in India;
(b) transfer or issue of any security by a person resident outside
India;
(c) transfer or issue of any security or foreign security by any
branch, office or agency in India of a person resident outside India;
(d) any borrowing or lending in foreign exchange in whatever form or
by whatever name called;
(e) any borrowing or lending in rupees in whatever form or by
whatever name called between a person resident in India and a person
resident outside India;
(f) deposits between persons resident in India and persons resident
outside India;
(g) export, import or holding of currency or currency notes;
(h) transfer of immovable property outside India, other than a lease
not exceeding five years, by a person resident in India;
(i) acquisition or transfer of immovable property in India, other
than a lease not exceeding five years, by a person resident outside
India;
(j) giving of a guarantee or surety in respect of any debt,
obligation or other liability incurredâ
(i) by a person resident in India and owed to a person resident
outside India; or
(ii) by a person resident outside India.
(4) A person resident in India may hold, own, transfer or invest in
foreign currency, foreign security or any immovable property situated
outside India if such currency, security or property was acquired,
held or owned by such person when he was resident outside India or
inherited from a person who was resident outside India.
(5) A person resident outside India may hold, own, transfer or
invest in Indian currency, security or any immovable property situated
in India if such currency, security or property was acquired, held or
owned by such person when he was resident in India or inherited from a
person who was resident in India.
(6) Without prejudice to the provisions of this section, the Reserve
Bank may, by regulation, prohibit, restrict, or regulate establishment
in India of a branch, office or other place of business by a person
resident outside India, for carrying on any activity relating to such
branch, office or other place of business.
Export of goods and services.
7. (1) Every exporter of goods shallâ
(a) furnish to the Reserve Bank or to such other authority a
declaration in such form and in such manner as may be specified,
containing true and correct material particulars, including the amount
representing the full export value or, if the full export value of the
goods is not ascertainable at the time of export, the value which the
exporter, having regard to the prevailing market conditions, expects
to receive on the sale of the goods in a market outside India;
(b) furnish to the Reserve Bank such other information as may be
required by the Reserve Bank for the purpose of ensuring the
realisation of the export proceeds by such exporter.
(2) The Reserve Bank may, for the purpose of ensuring that the full
export value of the goods or such reduced value of the goods as the
Reserve Bank determines, having regard to the prevailing market
conditions, is received without any delay, direct any exporter to
comply with such requirements as it deems fit.
(3) Every exporter of services shall furnish to the Reserve Bank or
to such other authorities a declaration in such form and in such
manner as may be specified, containing the true and correct material
particulars in relation to payment for such services.
Realisation and repatriation of foreign exchange.
8. Save as otherwise provided in this Act, where any amount of
foreign exchange is due or has accrued to any person resident in
India, such person shall take all reasonable steps to realise and
repatriate to India such foreign exchange within such period and in
such manner as may be specified by the Reserve Bank.
Exemption from realisation and repatriation in certain cases.
9. The provisions of sections 4 and 8 shall not apply to the
following, namely:â
(a) possession of foreign currency or foreign coins by any person up
to such limit as the Reserve Bank may specify;
(b) foreign currency account held or operated by such person or
class of persons and the limit up to which the Reserve Bank may
specify;
(c) foreign exchange acquired or received before the 8th day of
July, 1947 or any income arising or accruing thereon which is held
outside India by any person in pursuance of a general or special
permission granted by the Reserve Bank;
(d) foreign exchange held by a person resident in India up to such
limit as the Reserve Bank may specify, if such foreign exchange was
acquired by way of gift or inheritance from a person referred to in
clause (c), including any income arising therefrom;
(e) foreign exchange acquired from employment, business, trade,
vocation, services, honorarium, gifts, inheritance or any other
legitimate means up to such limit as the Reserve Bank may specify; and
(f) such other receipts in foreign exchange as the Reserve Bank may
specify.