Consider the following statements regarding FERA 1 The dealings foreign exchange forex and sec...........

Economic Affairs Balance of Payments

Consider the following statements regarding FERA :

1. The dealings foreign exchange (forex) and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.

2. To conserve precious foreign exchange

3. FERA therefore proceeded on the presumption that all foreign exchange earned by Indian residents rightfully belonged to the Government of India and had to be collected and surrendered to the government of India.

Select the correct answer using the codes given below:

1 and 3 only

1 and 2 only

1, 2 and 3 only

Only 3

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Explanation:

The Foreign Exchange Regulation Act (FERA) was legislation passed in 1973[1] that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange(forex)and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.[2] The bill was formulated with the aim of regulating payments and foreign exchange.[3][4]
FERA was introduced at a time when foreign exchange (Forex) reserves of the country were low, Forex being a scarce commodity. FERA therefore proceeded on the presumption that all foreign exchange earned by Indian residents rightfully belonged to the Government of India and had to be collected and surrendered to the Reserve Bank of India (RBI). FERA primarily prohibited all transactions not permitted by RBI.[6]
The objective of FERA was to regulate certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange, the import and export of currency and to conserve precious foreign exchange and to optimize the proper utilization of foreign exchange so as to promote the economic development of the country.