The role of RBI in the foreign exchange market is revealed by the provisions of FERA (1973).
The RBI is the administrative authority for exchange control in India. The RBI has been given powers to issue licences to those who are involved in foreign exchange transactions.
The RBI has appointed a number of authorised dealers. They are permitted to carry out ail transactions involving foreign exchange. The above provision is laid down in Section 3 of FERA.
Issue Of Directions
The 'Exchange Control Manual' contains all directions and procedures given by RBI to authorised dealers from time to time.
Fixation Of Exchange Rates :-
The RBI has the responsibility of fixing the exchange value of home currency in terms of other currencies. This rate is known as official rate of exchange. All authorised dealers and money lenders are required to follow this rate strictly in all their foreign exchange transactions.
Foreign Investments :-
Non-residents can make investments in India only after obtaining the necessary permission from Central Government or RBI. Great investment opportunities are provided to non-resident Indians.
Foreign Travel :-
Indian residents can get foreign exchange released from RBI upto a specified amount for travelling abroad through proper application.
The RBI regulates import trade. Imports are permitted only against proper licenses. The items of imports that can be imported freely are specified under Open General Licence.
The RBI controls export trade. Export of gold and jewellery are allowed only with special permission from RBI.
Gold. Silver. Currency Notes Etc.
In recent years, the limits fixed for bringing gold, silver, currency notes etc. has been relaxed... [continues]
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