Section 47 of FEMA : Section 47: Power To Make Regulations

FEMA

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Explanation using Example

Imagine a software company in India that wants to borrow funds from a foreign investor. Under the Foreign Exchange Management Act (FEMA) 1999, the Reserve Bank of India (RBI) has the authority to regulate such capital account transactions. The company needs to ensure that the amount borrowed is within the permissible limits set by the RBI.

For this purpose, the RBI issues regulations under Section 47 of FEMA, which might specify that the company can borrow up to USD 5 million without requiring any specific approval. The company must adhere to these regulations and any formality such as furnishing a declaration in the manner prescribed by the RBI.

If the company receives more than the allowable limit, it may need to seek specific permission from the RBI or ensure immediate repatriation of the excess amount as per the regulations concerning the repatriation of foreign exchange.

This is a practical application of Section 47, where the RBI's regulations directly impact how the company engages in a capital account transaction involving foreign exchange.

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