Informing educating and connecting Indians across the globe . . . by Virendar Chand
Foreign Currency Exchange - India
Foreign exchange transactions in India have become more liberalized with the Foreign Exchange Management Act, 1999 (FEMA) which came into operation as of
1st June 2000. Foreign exchange dealers in India today have been given powers of making all types of remittances
in foreign exchange subject to present rules. The previous requirements of seeking Reserve Bank of India
permission has been eliminated for most transactions.
I remember leaving India in 1970 when I was allowed to
purchase only 8 dollars in foreign exchange for my travel
abroad. Things have indeed changed today in India as far as
foreign currency transactions are concerned.
Here are some of the significant provisions from FEMA
APPLICATION FOR REMITTANCES IN
A person, firm or bank may apply to an Authorized Dealer for remittances in any foreign currency to a
Application should be made in FORM -A1, if the purpose of remittance is import of goods into India.
For any other purpose in Form -A2
The Authorized Dealer may sell the foreign Exchange applied for provided the purpose of the request is an approved one.
MODE OF PAYMENT OF RUPEES AGAINST SALE OF FOREIGN EXCHANGE
Transactions amounting to Rupees 20,000 or more should be made by cheque payments. Payment can also be accepted in the form of a Banker's cheque / Pay
Order / Demand Draft. Receipt of Payment in cash in case of such sale of foreign Exchange or remittance in foreign Exchange is strictly prohibited.
EXCEPTIONS: Indian Currency Notes
If the purpose of sale of foreign exchange is for travel abroad for business etc, cash may be received by Authorized Dealer from Applicant up to Rs.
Where the rupee equivalent for drawing foreign exchange exceeds Rs. 50,000 either for any single installment or for more than one installment for a
single journey / visit, it should be paid by the traveler by means of a cross cheque / demand draft/ pay order.
TRAVELERS CHEQUE NEGOTIABLE ONLY IN INDIA
Rupee Travelers cheque cannot be cashed outside India, if they are issued solely for use within India. In such a case
they cannot be taken or sent out of India.
RECONVERSION OF INDIAN CURRENCY
Foreign currency may be sold against Indian Rupees held by
persons who are not resident of India but are passing through or
leaving India after a visit, at the time of their departure from
Foreign Currency Notes For this purpose, a Bank or encashment
certificate issued by an Authorized Dealer, Exchange bureau or
Authorized Money changer in form BCI, ECF OR ECR, is required
to show that the rupee had been acquired by sale of foreign
Exchange to an Authorized Dealer or money changer in India.
Such a certificate is valid for such reconversion i.e. a period of
three months is not over from the date of sale of the foreign currency by the traveler.
RATES OF EXCHANGE
Authorized dealers and their Exchange bureau may buy from and sell to public foreign currency notes and coins at rates of exchange determined by market
conditions. Dealings in foreign currency notes and coins between authorized dealers and between authorized dealers and money changers would also be at
rates determined by market conditions.
SEE NEXT PAGE FOR QUESTIONS & ANSWERS ON FOREIGN EXCHANGE INDIA
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional
accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has
been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail.
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