Rbi Staff Plea Against Fera Abolition

The All-India Reserve Bank of India Employees Association (AIRBEA) has said that the abolition of the Foreign Exchange Regulation Act (Fera) by the government would only mean a license to money-laundering and speculative activities on the part of unscrupulous business houses.

Pressure had been mounting for the past few months for repealing the act on the grounds that it was incompatible with the liberalised economic environment of the country and not export friendly.

AIRBEA feels that any move to annul Fera would be unwise and detrimental to the interest of the economy whose fundamentals are already causing concern. The union has pointed out that Fera has on many occasions been found inadequate to check the flight of foreign exchange from the country to safe havens abroad. AIRBEA has said that it would therefore be of utmost necessity to strengthen Fera and not dilute it. AIRBEA has called upon the Centre to ascertain the views of prominent economists of the country and take the Reserve Bank of India into confidence before embarking on any move in this direction.

The association has said that while the genuine difficulties of the exporters must be looked into, the government must not succumb to any pressure tactics. The purpose of the Act, the association has said, is to regulate certain payment dealings in foreign exchange and securities, export-import and other transactions indirectly affecting foreign exchange. AIRBEA has pointed out that the basic objective of Fera is to conserve forex resources of the country and to ensure its proper utilisation.

An AIRBEA press release says, the negation of the regulation of foreign exchange presupposes that monitoring of foreign currencies is no longer necessary and the reserves (foreign exchange) the country has are sufficient to take care of any situation, which is far from reality.