FEMA Current Affairs - 2019
Category Wise PDF Compilations available at This Link
The Karnataka High Court has quashed the order of Enforcement Directorate (ED) which froze the bank accounts of Greenpeace India. The court noted that the validity of the ED order has lost its efficacy on account of efflux of time as the period of 60 days has expired.
The accounts of the Greenpeace India were frozen on the account of the alleged violations of the Foreign Exchange Management Act (FEMA). The freezing of accounts had led to a financial crisis for the organisation and forced it to reduce its workforce substantially.
Why the accounts were frozen?
The Enforcement Directorate had alleged that Greenpeace India had incorporated Direct Dialogue Initiatives India Pvt Ltd (DDIIPL) in 2016 after the Central government had cancelled Greenpeace India’s Foreign Contribution Regulation Act licence in September 2015 for allegedly violating norms.
The ED argues that DDIIPL was created to facilitate the operational activities of Greenpeace. ED also alleged that DDIIPL spent around Rs 21 crore for its expenses since it was set up, “with no substantial revenue generation so far”.
Greenpeace India had strongly objected to the ED claims and had stated they would provide the government authorities with required financial details as they do not have anything to hide. Alleging the claims of ED as false and frivolous, Greenpeace India had said that false claims and accusations were part of a larger design to muzzle democratic dissent in the country and had challenged the order of ED in the Karnataka High Court.
Greenpeace India is the Indian arm of the international NGO Greenpeace. The NGO mainly works in the area of environmental conservation. Greenpeace through non-violent, creative confrontation aims to expose environmental problems and to force the solutions which are essential to a green and peaceful future.
The Reserve Bank of India (RBI) has tightened reporting norms for the Liberalised Remittance Scheme (LRS) under which individual can transfer up to US $2,50,000 abroad in a year. The purpose of tightening of norms is to improve monitoring and also to ensure compliance with LRS limits.
Currently, the LRS transactions are permitted by banks based on declaration made by remitter. The monitoring of adherence to limit is confined to obtaining such declaration without independent verification, in absence of reliable source of information.
Now under tightened reporting norms, daily reporting system by Authorised Dealer (AD) banks of transactions undertaken by individuals under LRS has been placed, which will be accessible to all the other ADs. It will be mandatory for banks to upload daily transaction-wise information undertaken by them under LRS.
Liberalised Remittance Scheme (LRS)
LRS is facility provided by RBI for all resident individuals including minors to freely remit upto certain amount in terms of US Dollar for current and capital account purposes or combination of both. The scheme was introduced in February 2004 and its regulations are provided under Foreign Exchange Management Act (FEMA), 1999. After it was launched, the LRS limit was US $25,000, but it has been revised in stages consistent with prevailing macro and micro economic conditions. At present, LRS limit for all resident individuals, including minors, is US $2,50,000 (Rs. 1.5 crore) per financial year.
Under LRS, individuals can make remittances for overseas education, travel, medical treatment, maintenance to relatives living abroad, gifting and donations. The remitted money can be used for purchase of shares and property as well. Individuals can also open, maintain and hold foreign currency accounts with overseas banks for carrying out transactions under it.
Restrictions: Under LRS, remittances cannot be used for trading on foreign exchange markets, purchase of Foreign Currency Convertible Bonds issued abroad by Indian companies and margin or margin calls to overseas exchanges and counterparties. Similarly, individuals are not allowed to send money to countries identified as ‘non cooperative jurisdictions’ by Financial Action Task Force (FAFT). It also prohibits remittances to entities identified as posing terrorist risks.