Key Provisions under FEMA in Relation to the Liberalised Remittance Scheme (LRS): Permissible and Non-Permissible Remittances

Foreign Exchange

Overview of FEMA, 1999 The Foreign Exchange Management Act (FEMA), 1999, governs the management of foreign exchange transactions in India. Under FEMA, transactions are broadly classified into current account transactions and capital account transactions. Current account transactions refer to transactions that do not alter the assets or liabilities of a person resident in India or…

Understanding Capital Account Transactions and Current Account Transactions

Foreign Exchange

Current account transactions and capital account transactions are the two main components of a country’s balance of payments, reflecting different types of financial interactions with the rest of the world. Current account transactions involve the flow of goods, services, income, and current transfers, while capital account transactions involve the flow of financial assets, like investments…

Release of Foreign Exchange for Non-Trade Current Account Transactions under the Liberalised Remittance Scheme (LRS)

Foreign Exchange

The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI), permits resident individuals in India to remit up to USD 250,000 per financial year for specified permissible transactions. These remittances may pertain to both current and capital account transactions, or a combination thereof, within the prescribed limit. This article outlines the provisions…

Electronic Payment Systems in India

Information Technology, PPB

An electronic payment sometimes called a digital payment is a good alternative to traditional methods of cash payment and speeds up transaction cycles from person to person, person to business, person to government, Government to person, business to business, business to Government, etc. “Faceless, Paperless, Cashless” is one of the professed roles of the Digital…

Understanding Foreign Exchange Dealing Room Operations: Structure, Functions, and Regulatory Framework

Foreign Exchange

IntroductionForeign exchange (FX) dealing room operations are central to the functioning of modern banking institutions, particularly those engaged in international trade and financial services. These operations involve the buying and selling of currencies to support the liquidity, profitability, and risk management objectives of banks. FX dealing rooms not only act as profit centers but also…

India’s Exchange Rate Mechanism: Structure, Evolution, and Central Bank Intervention

Foreign Exchange

IntroductionAn Exchange Rate Mechanism (ERM) refers to a framework of procedures employed to regulate a country’s currency exchange rate relative to other currencies. It forms a critical component of a nation’s monetary policy and is typically administered by the central bank. While exchange rates are largely determined by global market dynamics—primarily the supply and demand…

Understanding Foreign Exchange: Definition, Market Structure, and Determinants of Exchange Rates

Foreign Exchange

IntroductionForeign exchange, commonly referred to as forex, entails the conversion of one currency into another. The foreign exchange market is the platform where such conversions take place, serving as a critical component of the global financial system. Exchange rates—the prices at which one currency is exchanged for another—are primarily determined by supply and demand dynamics.…

Understanding Exchange Rates and the Foreign Exchange (Forex) Market

Foreign Exchange

IntroductionForeign exchange (Forex or FX) refers to the process of converting one currency into another at a specific rate, known as the foreign exchange rate. Forex trading involves the buying and selling of currency pairs—such as USD/INR or EUR/INR—and is an essential component of international trade, investment, and global financial systems. Determinants of Exchange Rates…