Loophole In New Bill

The definition of "a person resident in India" in the Foreign Exchange Management Bill could allow prospective offenders to circumvent the proposed law . The Fema Bill, which states that the proposed law would be applicable only to a "person resident in India", has defined the term as: "a person residing in India for more than 182 days during... a period of 365 days immediately preceding the date on which such period is reckoned".

Experts point out that any prospective offender can circumvent the law, by staying less than 182 days in a year in India . The Bill, which is expected to be tabled in Parliament today, was cleared by the cabinet a few days ago. In case it gets a clearance from the House, the Fema would replace the existing Foreign Exchange Regulation Act (Fera) which would then stand repealed.

 

The Fema Bill, which delineates a diluted foreign exchange regime, differs significantly from the Fera which had draconian provisions. While the Fera have provision to regulate both civil and criminal offences, Fema deals only with civil offences. The Fema appoints the Reserve Bank of India as the sole monitor of foreign exchange flows in the country. The apex bank would appoint authorised dealers of foreign exchange and by regulating these dealers, the RBI would contain currency stability in the country. Under the Fema, officers of the Enforcement Directorate-the implementing agency-would be conferred powers similar to those on Income-Tax officers.