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<div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fforex%2520regulation_082712024110.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img><p>Walk through the corridors of the Enforcement Directorate (ED) and there are these dark pockets of cobwebs, a musty smell and an eerie silence.</p><p>But over the past 25 years, they have hardly bothered those summoned there as the draconian power that the directorate's officers wield over them overshadows all that. Not for much longer though. </p><p>Last week, the Government presented in Parliament two bills to enact the Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA), both aimed at overhauling the existing foreign exchange regulatory system. The bills are expected to be passed in the winter session of Parliament.</p><p>While FEMA and its softer provisions will replace the Foreign Exchange Regulation Act (FERA), the PMLA seeks to check the flow of money connected with criminal activity.</p><p> Till now, money laundering essentially meant hawala transactions. But with the rupee heading towards full convertibility, hawala is bound to become less attractive. </p><div class="itemcenter"><amp-iframe height="62" title="" width="320" sandbox="allow-forms allow-scripts allow-same-origin allow-popups allow-top-navigation allow-top-navigation-by-user-activation" allowfullscreen src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Findiatoday%2Fbanner%2Fpreferred-source-new.html%3Fv%3D1.014%5Cu0026native%3D1" class="mrBt15 preferred-source-banner"> </amp-iframe></div><table><tbody><tr><td><b>Telling Differences</b></td></tr><tr><td><div align="center"><b>FERA</b><br></div><ul><li>Aim: conserve foreign exchange.</li><li>Criminal law. Non-bailable arrest possible even on grounds of suspicion.</li><li>RBI nod needed for transactions.</li><li>Applies to Indian citizens living within and outside India.</li></ul></td><td><div align="center"><b>FEMA</b><br></div><ul><li>Aim: boost foreign trade, investment.</li><li>Civil law. Arrest possible only if accused defaults on penalty payment.</li><li>Powers delegated to select forex dealers.</li><li>Will apply to residents in India staying beyond 182 days</li></ul></td></tr></tbody></table></p><p>To prevent laundering through other routes, the new law will cover a 
range of crimes, from narcotics peddling and flesh trade to terrorism 
and murder. </p><p>It will also plug ambiguities in existing legislation which 
make it difficult for the authorities to penalise those not directly 
involved with the crime, though they could be using the money involved. <br></p><p>Says Revenue Secretary N.K. Singh: "FERA was an unwritten law on money laundering but with a separate bill, offences will be clearly covered. It is also in keeping with the best international practice."</p><p>The industry's reaction has been mixed. While it is celebrating the arrival of FEMA, there are fears that some of the powers the ED may be shedding will make a backdoor entry through the provisions of PMLA. While FERA was a criminal offence, FEMA will be a civil offence, entailing less stringent penalties. </p><p>Says Rakesh Mohan, director-general, National Council of Applied Economic Research: "It is the first truly positive sign on the economic policy front from the Government." The new bill goes beyond the FEMA proposal made by the short lived United Front (UF) government. </p><p>The ed's powers to arrest will now be taken away, as also its right to search and seize. The way its new role has been envisaged, the ED will function like a policeman who cannot reach for the handcuffs.</p><p>In other ways too, the BJP Government seems to have gone a step ahead. The FEMA approved by the UF cabinet required that a distinction be made between criminal and civil cases. The new bill, however, stipulates that all offences under FEMA will be treated as civil cases which can be settled by paying a penalty. </p><table><tbody><tr><td><b>The ED Misadventure</b></td></tr><tr><td><div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fchandraswami_082712024110.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img></div><b>Chandraswami:</b> The godman faces 15 show-cause notices. Arrested in one case for Rs 9-crore forex violation.<br><i><b>Status:</b></i> Investigation on in seven cases. Rest in court.</p><p><b>Jain Hawala:</b> Show-cause notices issued to prominent politicians for Rs 68-crore forex violation.<br><i><b>Status:</b></i> Some charges dropped, others in court.</p><div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fkrishna-kumar_082712024111.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img></div><b>S. Krishna Kumar:</b> The former minister was arrested along with his wife for FERA violation of Rs 51 lakh. He was also accused of acquiring foreign exchange abroad.<br><i><b>Status:</b></i> Investigation on.</p><p><b>N. Sasikala and JJ TV:</b> Three show-cause notices to those close to Jaya-lalitha for Rs 10-crore FERA violation.<br><i><b>Status:</b></i> Case before FERA Board.</p><p><b>Urea Scam:</b> National Fertiliser Ltd was charged with illegally remitting Rs 133 crore. Formmer prime minister P.V. Narasimha Rao's son Prabhakar Rao was questioned.<br><i><b>Status:</b></i> Probe on.</p><div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fsatish-sharma_082712024111.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img></div><b>Satish Sharma:</b> The ex-minister was accused of receiving gifts in forex through illegal channels.<br><i><b>Status:</b></i> Probe on.</td></tr></tbody></table></p><p>Further, businessmen will no longer have to go through the tedious procedure of getting approvals from the Reserve Bank of India for foreign trips and minuscule foreign exchange transactions. </p><p>Powers will now be delegated to authorised forex dealers to do the needful. "It's a welcome change," says Jamshyd Godrej, managing director, Godrej & Boyce. "FERA was punitive when we were trying to globalise."</p><p>But, like other industrialists, he is keeping his fingers crossed as FEMA is yet to be passed. With the ED cracking down on high-profile offenders in the past three years, there is bound to be public criticism that the bill was introduced in a hurry. </p><p>That there was no protest from the opposition parties on the day the bill was tabled has only fuelled such doubts. </p><p>That apart, the scope of the PMLA is also worrying industry circles. Under the act, designated officers will have the power to arrest an individual on mere suspicion of a violation. </p><p>One such violation deals with "falsification of accounts". Currently, it is an offence under the Indian Penal Code where the accused can get away by paying a fine. </p><p>Anticipatory bail is also allowed in case of arrest. But in the new dispensation, an individual can be straightaway arrested on the basis of "suspicion". </p><p>Anticipatory bail is not possible. "This only means further harassment for entrepreneurs," says K.K. Modi, president of the Federation of Indian Chambers of Commerce and Industry. </p><p>If the accused is proved guilty, punishment can mean rigorous imprisonment for three to seven years with a fine of up to Rs 5 lakh. The PMLA also makes it mandatory for financial institutions (FIs) to report transactions above Rs 25 lakh to the Income Tax Commissioner. Businessmen and FIs, however, want the limit to be raised to Rs 1 crore. </p><p>Catering to these demands will not be easy. The Government believes that the liberal provisions of FEMA have to be balanced by stringent legislation against money laundering. The aim is to ensure that crime proceeds do not make their way into India.</p><p>At the same time, the Government will have to be careful about when FEMA will come into force. If the rupee's instability and the economy's downslide continue, there is danger of the flight of capital from the country. </p><p>That does seem to be the case at the moment. Besides sluggish exports, first quarter company results and the overall industrial growth suggest that the increase in GDP this year may not be much higher than last year's 5.1 per cent. Moreover, forex traders fear a further depreciation of the rupee if there is fresh turbulence in the South-east Asian markets. </p><p>As B.B. Bhattacharya, economist with the Institute of Economic Growth, points out, "The bop front is not healthy at the moment. That is disturbing." The bottom line is that the economy must get on track before FEMA and PMLA are enforced. It is only then that the two legislations can have the desired effect.<br></p><div id="tab-link-wrapper-plugin"><div class="authors__container"><div class="authors__by"><div class="authlable">Published By: </div><div class="authdetaisl">AtMigration </div></div><div class="published__on"><div class="authlable">Published On: </div><div class="authdetaisl">Aug 17, 1998</div></div></div><div class="sendros">--- ENDS ---</div></div></div>

economy

Economy

<div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fforex%2520regulation_082712024110.jpg" loading="lazy" /></div><p>Walk through the corridors of the Enforcement Directorate (ED) and there are these dark pockets of cobwebs, a musty smell and an eerie silence.</p><p>But over the past 25 years, they have hardly bothered those summoned there as the draconian power that the directorate's officers wield over them overshadows all that. Not for much longer though. </p><p>Last week, the Government presented in Parliament two bills to enact the Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA), both aimed at overhauling the existing foreign exchange regulatory system. The bills are expected to be passed in the winter session of Parliament.</p><p>While FEMA and its softer provisions will replace the Foreign Exchange Regulation Act (FERA), the PMLA seeks to check the flow of money connected with criminal activity.</p><p> Till now, money laundering essentially meant hawala transactions. But with the rupee heading towards full convertibility, hawala is bound to become less attractive. </p><div class="itemcenter"><iframe scrolling="no" allowfullscreen="" frameborder="0" width="100%" height="62" awidth="320" aheight="62" amplayout="fixed" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Findiatoday%2Fbanner%2Fpreferred-source-new.html%3Fv%3D1.014" class="preferred-source-banner" loading="lazy"></iframe></div><style>.preferred-source-banner{  margin-top: 10px; margin-bottom:10px;}</style><table style="margin-left: 8px; background-color: rgb(229, 229, 229);" align="right" border="1" cellpadding="3" cellspacing="3" width="300"><tbody><tr style="" dir="" align="center" background="" bgcolor="" height="" lang="" valign="top" xml:lang=""><td scope="" style="width: 150px;" dir="" colspan="2" rowspan="1" align="" lang="" valign="" xml:lang=""><b style="color: rgb(204, 0, 0);">Telling Differences</b></td></tr><tr style="" dir="" align="" background="" bgcolor="" height="" lang="" valign="top" xml:lang=""><td scope="" style="width: 150px;" dir="" id="" align="" lang="" valign="" xml:lang=""><div align="center"><b>FERA</b><br></div><ul><li>Aim: conserve foreign exchange.</li><li>Criminal law. Non-bailable arrest possible even on grounds of suspicion.</li><li>RBI nod needed for transactions.</li><li>Applies to Indian citizens living within and outside India.</li></ul></td><td scope="" style="width: 150px;" dir="" align="" lang="" valign="" xml:lang=""><div align="center"><b>FEMA</b><br></div><ul><li>Aim: boost foreign trade, investment.</li><li>Civil law. Arrest possible only if accused defaults on penalty payment.</li><li>Powers delegated to select forex dealers.</li><li>Will apply to residents in India staying beyond 182 days</li></ul></td></tr></tbody></table></p><p>To prevent laundering through other routes, the new law will cover a 
range of crimes, from narcotics peddling and flesh trade to terrorism 
and murder. </p><p>It will also plug ambiguities in existing legislation which 
make it difficult for the authorities to penalise those not directly 
involved with the crime, though they could be using the money involved. <br></p><p>Says Revenue Secretary N.K. Singh: "FERA was an unwritten law on money laundering but with a separate bill, offences will be clearly covered. It is also in keeping with the best international practice."</p><p>The industry's reaction has been mixed. While it is celebrating the arrival of FEMA, there are fears that some of the powers the ED may be shedding will make a backdoor entry through the provisions of PMLA. While FERA was a criminal offence, FEMA will be a civil offence, entailing less stringent penalties. </p><p>Says Rakesh Mohan, director-general, National Council of Applied Economic Research: "It is the first truly positive sign on the economic policy front from the Government." The new bill goes beyond the FEMA proposal made by the short lived United Front (UF) government. </p><p>The ed's powers to arrest will now be taken away, as also its right to search and seize. The way its new role has been envisaged, the ED will function like a policeman who cannot reach for the handcuffs.</p><p>In other ways too, the BJP Government seems to have gone a step ahead. The FEMA approved by the UF cabinet required that a distinction be made between criminal and civil cases. The new bill, however, stipulates that all offences under FEMA will be treated as civil cases which can be settled by paying a penalty. </p><table style="margin-right: 8px; background-color: rgb(229, 229, 229);" align="left" border="1" cellpadding="3" cellspacing="3" height="242" width="300"><tbody><tr align="center"><td><b style="color: rgb(204, 0, 0);">The ED Misadventure</b></td></tr><tr style="" dir="" id="" align="" background="" bgcolor="" height="" lang="" valign="top" xml:lang=""><td><div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fchandraswami_082712024110.jpg" loading="lazy" /></div></div><b>Chandraswami:</b> The godman faces 15 show-cause notices. Arrested in one case for Rs 9-crore forex violation.<br><i><b>Status:</b></i> Investigation on in seven cases. Rest in court.</p><p><b>Jain Hawala:</b> Show-cause notices issued to prominent politicians for Rs 68-crore forex violation.<br><i><b>Status:</b></i> Some charges dropped, others in court.</p><div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fkrishna-kumar_082712024111.jpg" loading="lazy" /></div></div><b>S. Krishna Kumar:</b> The former minister was arrested along with his wife for FERA violation of Rs 51 lakh. He was also accused of acquiring foreign exchange abroad.<br><i><b>Status:</b></i> Investigation on.</p><p><b>N. Sasikala and JJ TV:</b> Three show-cause notices to those close to Jaya-lalitha for Rs 10-crore FERA violation.<br><i><b>Status:</b></i> Case before FERA Board.</p><p><b>Urea Scam:</b> National Fertiliser Ltd was charged with illegally remitting Rs 133 crore. Formmer prime minister P.V. Narasimha Rao's son Prabhakar Rao was questioned.<br><i><b>Status:</b></i> Probe on.</p><div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998August%2Fsatish-sharma_082712024111.jpg" loading="lazy" /></div></div><b>Satish Sharma:</b> The ex-minister was accused of receiving gifts in forex through illegal channels.<br><i><b>Status:</b></i> Probe on.</td></tr></tbody></table></p><p>Further, businessmen will no longer have to go through the tedious procedure of getting approvals from the Reserve Bank of India for foreign trips and minuscule foreign exchange transactions. </p><p>Powers will now be delegated to authorised forex dealers to do the needful. "It's a welcome change," says Jamshyd Godrej, managing director, Godrej & Boyce. "FERA was punitive when we were trying to globalise."</p><p>But, like other industrialists, he is keeping his fingers crossed as FEMA is yet to be passed. With the ED cracking down on high-profile offenders in the past three years, there is bound to be public criticism that the bill was introduced in a hurry. </p><p>That there was no protest from the opposition parties on the day the bill was tabled has only fuelled such doubts. </p><p>That apart, the scope of the PMLA is also worrying industry circles. Under the act, designated officers will have the power to arrest an individual on mere suspicion of a violation. </p><p>One such violation deals with "falsification of accounts". Currently, it is an offence under the Indian Penal Code where the accused can get away by paying a fine. </p><p>Anticipatory bail is also allowed in case of arrest. But in the new dispensation, an individual can be straightaway arrested on the basis of "suspicion". </p><p>Anticipatory bail is not possible. "This only means further harassment for entrepreneurs," says K.K. Modi, president of the Federation of Indian Chambers of Commerce and Industry. </p><p>If the accused is proved guilty, punishment can mean rigorous imprisonment for three to seven years with a fine of up to Rs 5 lakh. The PMLA also makes it mandatory for financial institutions (FIs) to report transactions above Rs 25 lakh to the Income Tax Commissioner. Businessmen and FIs, however, want the limit to be raised to Rs 1 crore. </p><p>Catering to these demands will not be easy. The Government believes that the liberal provisions of FEMA have to be balanced by stringent legislation against money laundering. The aim is to ensure that crime proceeds do not make their way into India.</p><p>At the same time, the Government will have to be careful about when FEMA will come into force. If the rupee's instability and the economy's downslide continue, there is danger of the flight of capital from the country. </p><p>That does seem to be the case at the moment. Besides sluggish exports, first quarter company results and the overall industrial growth suggest that the increase in GDP this year may not be much higher than last year's 5.1 per cent. Moreover, forex traders fear a further depreciation of the rupee if there is fresh turbulence in the South-east Asian markets. </p><p>As B.B. Bhattacharya, economist with the Institute of Economic Growth, points out, "The bop front is not healthy at the moment. That is disturbing." The bottom line is that the economy must get on track before FEMA and PMLA are enforced. It is only then that the two legislations can have the desired effect.<br></p><div id="tab-link-wrapper-plugin"><div class="authors__container"><div class="authors__by"><div class="authlable">Published By: </div><div class="authdetaisl">AtMigration </div></div><div class="published__on"><div class="authlable">Published On: </div><div class="authdetaisl">Aug 17, 1998</div></div></div><div class="sendros">--- ENDS ---</div></div></div>

A proposed anti-money laundering legislation clouds industry's celebration over the move to repeal FERA.

India Today

Unshackling the past - India Today

Proposed anti-money laundering bill clouds industry's celebration over move to repeal FERA

Unshackling the past

According to National Crime Records Bureau (NCRB) data, juveniles were involved in 31,365 crimes in 2023. That year, 40,036 children were arrested—nearly 79 percent of them between 16 and 18 years old.

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Know your laws: How kids' crimes expose chinks in legal system

Former India pacer Chetan Sharma expects Pakistan to reverse their boycott of the India match after the Bangladesh elections. The Pakistan government have denied permission to their cricket team to play against India.

Chetan Sharma at Salaam Cricket 2026 (Internal Photo)

Pak will make a U-turn on India boycott stance after February 12: Chetan Sharma

A toddler's first birthday party in Uttar Pradesh’s Aligarh has attracted attention after a video showed a lavish announcement with extravagant gifts for the child.

gold

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North India faces a mix of dense fog and fresh mountain snow this Friday. A new western disturbance will impact the Himalayas while cold winds sweep across the northern plains.


Tourists enjoy winter and adventure sports including skiing in the snow-laden Solang Valley in Kullu district, Himachal Pradesh on Wednesday, February  4, 2026. (Photo: PTI)

Cold mountain winds and Himalayan snow to grip North India on Friday

Mustafizur Rahman has signed with Lahore Qalandars for PSL 11 after his IPL release by KKR, agreeing to a deal worth about Rs 2 crore, nearly 77 per cent lower than his IPL contract.

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Mustafizur heads to PSL after shock IPL exit, to earn 77 per cent less

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In this address, Prime Minister Narendra Modi outlines India's trajectory towards becoming a developed nation, emphasizing that the country has reached a decisive stage in its journey. He highlights that 'The world is moving very fast towards a new world order,' with India positioned as a reliable 'Vishwa Mitra' or global friend. The Prime Minister notes that while many developed nations are aging, India’s strength lies in its youthful population and significant talent pool. He contrasts the current economic stability—characterized by high growth and low inflation—with the previous 'Fragile Five' status, noting India's progress toward becoming the world's third-largest economy. Modi also mentions recent 'future-ready' trade deals, including significant negotiations with the European Union, and asserts India's role as a leading voice for the Global South on the international stage.

World moving towards a new world order: PM Modi in Rajya Sabha

Opposition leaders staged a walkout from the Rajya Sabha during Prime Minister Narendra Modi's reply to the Motion of Thanks to President address on Thursday.

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Here's the drone visuals of the massive traffic jam on the Mumbai-Pune Expressway, which has hit vehicular movement for over 24 hours after a gas tanker overturned in the hilly Khandala Ghat section.

drone

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Addressing the Lok Sabha, Union Commerce Minister Piyush Goyal said the government has successfully safeguarded sensitive sectors in US trade deal.  

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Proposed anti-money laundering bill clouds industry's celebration over move to repeal FERA

A proposed anti-money laundering legislation clouds industry's celebration over the move to repeal FERA.

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