Relief in Fera cases likely

The government has asked the Reserve Bank of India to review the pending cases of alleged violation of the Foreign Exchange Regulation Act so that these can be dealt with under the more liberal Foreign Exchange Management Act (Fema), which replaced the earlier law.

The initiative could help a large number of the alleged Fera violators get away with just financial penalties instead of criminal charges. The government's advisory, informed sources said, will not apply to all the cases as the RBI will decide on a case-to-case basis.

The government wants the RBI to take up cases which do not have major ramifications on foreign exchange management and deal with minor repatriations matters.

The Reserve Bank is in the process of collating such cases and making a rough estimate of the amount of foreign exchange involved.

Officials clarified that this will not result in Fera cases being dropped. "What would happen is that if RBI realises that the violation is not significant, its views will be forwarded to the courts for examination and the offender could get away through compounding of offence under Fema instead of facing criminal charges under Fera," an official said. 
 

LIFE UNDER FEMA

• Offence no longer a criminal offence, punishable with a financial penalty
  
  
• For a quantifiable offence, penalty could be up to twice the sum involved
  
  
• In non-quantifiable cases, the penalty can go up to Rs 100,000.
  
  
• In cases where contravention is a continuing offence, a further penalty of up to Rs 5,000 for a day can be levied from the day the offence first took place

As a precedent, they cited the long-pending share transfer case of Surachan Chawla, a Thailand-based NRI, who was to acquire a 38 per cent stake in Catholic Syrian Bank.

Permission for the deal had been withheld since he had a pending Fera case. Recently, RBI and the Enforcement Directorate have approved the share transfer and forwarded their views to the Supreme Court.

The official said that the agency did not have the precise number of the cases which were yet to be decided, though there were nearly 3,000 cases pending in various courts and only 300-400 cases were to be decided.