Previous Year Question
What is the full form of FEMA?
Correct Answer: D
Detailed Solution
FEMA stands for Foreign Exchange Management Act. Its official title is the Foreign Exchange Management Act, 1999, and it is Act No. 42 of 1999. According to India Code, the Act was enacted on 29 December 1999.
The main objective of FEMA is to consolidate and amend the law relating to foreign exchange, facilitate external trade and payments, and promote the orderly development and maintenance of the foreign-exchange market in India.
FEMA came into force on 1 June 2000 and replaced the earlier Foreign Exchange Regulation Act, 1973 (FERA). According to the RBI, foreign-exchange transactions under FEMA are broadly classified into current account transactions and capital account transactions.
Therefore, remember the important sequence: FERA, 1973 → FEMA, 1999 → effective from 1 June 2000. FEMA focuses on facilitating external trade and payments and the orderly management of the foreign-exchange market rather than merely imposing rigid foreign-exchange controls.