COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

Cabinet's nod for Foreign Exchange Management Bill

The Union cabinet on Monday approved the Foreign Exchange Management Bill to replace the obsolete Foreign Exchange Regulation Act as a part of the process of gradually liberalising capital account convertibility.

The broad features of the bill came up for discussion at the cabinet meeting, chaired by Prime Minister I K Gujral, and will go to the law ministry for drafting, an official spokesman said in New Delhi on Monday.

He said the bill will regulate and liberalise the regime pertaining to capital account transactions, and have provisions for dealing with offences for violation and for penalties.

The spokesman said that all cases of violations of FERA, until and unless replaced by the new act, will continue to be dealt under the existing law.

He said that Finance Minister Palaniappan Chidambaram had stated in his budget speech that ''as we go towards a more open economy with greater investment linkages with the rest of the world, the regulation governing the foreign exchange regulations also need to be modernised.''

The Reserve Bank of India appointed a committee of experts to draft the new bill in pursuance of the finance minister's proposal.

The committee prepared broad features of the bill, which were discussed at the cabinet meeting.

UNI