CRIMINALIZING THE POSSESSION OF FOREIGN EXCHANGE
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Abstract
In situations when a business venture imports merchandise from different nations, trades its items to them or makes speculations abroad, the transaction is made in foreign exchange. Foreign exchange signifies 'foreign money' and incorporates: - (i) deposits, credits and balances payable in any foreign currency; (ii) drafts, travellers’ cheques, letters of credit or bills of trade, expressed or drawn in Indian rupees yet payable in any foreign currency; and (iii) drafts, travellers’ cheques, letters of credit or bills of trade drawn by banks, organizations or people outside India, yet payable in Indian rupees.
In India, all exchanges that incorporate foreign exchange were managed and regulated by Foreign Exchange Regulations Act (FERA), 1973. The fundamental objective of FERA was preservation and appropriate use of the foreign exchange assets of the nation. It likewise looked to control certain parts of the behaviour of business outside the nation by Indian organizations and in India by remote organizations. It was a criminal enactment which implied that its infringement would prompt to imprisonment and payment of heavy fine. It had numerous prohibitive provisos which hindered foreign ventures.
Foreign Exchange Regulation Act (FERA) has been replaced by Foreign Exchange Management Act 1999 (FEMA) which has been passed in the winter session of the parliament. FEMA has now finished 17 years of its existence. The replacement of FEMA with FERA has resulted in decriminalization of the offences mentioned and hence FEMA has become unnecessarily lenient and at the same time made it futile as the offences mentioned there under are now classified as civil and not criminal offences. FEMA is a civil law which implies that in case of its violation, it will call for payment of only monetary penalties and fines. It is the main statute which deals with transactions of foreign exchange. This paper limits the scope of foreign exchange to foreign currency. This paper focuses on the idea that Possession of foreign exchange is a crime and should be criminalized. Hence, the decision to do away with FERA and implement FEMA hereunder classifying it as a civil offence was a miscalculated judgment. The paper will provide arguments in favour of criminalizing possession of foreign exchange.
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