Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
Before we proceed with what the Foreign Exchange Regulation Act (FERA) entails, it is vital to have a firm grasp of the concept of foreign exchange itself.
Now, foreign exchange primarily refers to the dealing of one currency for another. Any transactions concerning foreign exchange typically take place on the foreign exchange market. This is also known as the forex market. The foreign exchange market is the largest, most fluid, and dissolvable market in the world. The most fundamental aspect of this market is that it is completely electronic and has no subjective location.
Foreign exchange has been identified and established as exclusive territory for banks and financial corporations at large. Now, considering the burgeoning significance of such a market, the need to bring it under the ambit of regulation was strongly realized. This is where the Foreign Exchange Regulation Act (FERA) comes into the picture. This legislation acts as a chaperon to all business dealings and trading concerning foreign exchange.
Pertaining to real estate, it should be noted that under the provisions of the Foreign Exchange Regulation Act, the criteria for being eligible to purchase any property in India is conditional to retaining citizenship of India. Hence, if you wish to buy any immovable property in India, you must hold Indian citizenship.
Here are some other features of the act:
• Every foreign exchange dealing will require authorization by the Reserve Bank of India.
• Restrictions and limitations are imposed on the import and export of currency, issuing of bearer securities, holding and acquiring immovable properties outside of India, making/receiving payments to/from individuals residing outside of India, etc.
• All currency conversation rates are to be decided with reference to authorization from the Reserve Bank of India.
• The RBI reserves the right to summon any information or documents as required.
Conclusively speaking, it may be said that any trade or business dealing that is concerned or affiliated with a foreign exchange would come under the extent of the Foreign Exchange Regulation Act. It is noteworthy to realize that this legislation was introduced with the objective of regulating foreign exchange affairs in an organized manner. However, it ended up hindering the evolution of Indian industries because of the unreasonably ironclad restrictions put forth by it.
