FEMA, enacted in 1999, aims to facilitate external trade and maintenance of the foreign exchange market in India. The RBI is the regulatory authority, it governs foreign exchange transactions and compliance.

Foreign Exchange Management Act (FEMA)

FEMA is an Indian law enacted in 1999 to replace the earlier Foreign Exchange Regulation Act (FERA). Its main objective is to facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India. It empowers the Reserve Bank of India (RBI) to regulate the flow of payments and foreign exchange transactions.

Reserve Bank of India (RBI)

The RBI is India’s central bank, established in 1935. It regulates the issue and supply of the Indian rupee and manages the country’s main payment systems.