Foreign Exchange Regulation Act 2019 | विदेशी विनिमय नियमन ऐन २०१९

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forex regulation

Objectives of Foreign Exchange Regulation Act 2019

  • To regulate foreign exchange related transactions.
  • To maintain the economic interest of the general public.
  • To promote the use of foreign exchange for the payment and receive of foreign trade.
  • To promote foreign investment and technology transfer,
  • To promote the use of foreign currency in loan exchange.
  • To maintain the balance of payment (BoP) in the nation.

Scopes

  • Use of foreign exchange investment and technology transfer.
  • Foreign exchange (buying & selling of FOREX).
  • Use of foreign exchange for the payment/receive of foreign trade.
  • Use of foreign currency in loan exchange (transaction) with foreign entities.
  • Regulations of foreign-related transactions.

Major Provisions

  • Clarifications fo various foreign exchange related terms like foreign exchange, convertible currency.

FOREX->

Foreign Currencies

Convertible Currencies

Foreign Negotiable Instruments

Example – All the deposits, landing, balance, foreign, negotiable instrument, international cheques, draft/travel cheque, electric fund transfer tools, credit cards, letter of credit, bills of exchange, etc.

  • The provision relating to a license for the transaction of foreign exchange.
  • Foreign exchange regulation act assigned to NRB as a regulation for Foreign Exchange transactions.
  • The provision relating to the use of foreign exchange in foreign trade to pay or receive.
  • Provision relating to lending borrowing loan, repatriation (the sending of money back to one’s own country) of investment and payment on technology transfer in the form of foreign exchange.
  • Provision relating to investigation and seized of confiscation of suspicious foreign exchange which is used by violating the legal provision.
  • Provision relating to the permission of NRB to be obtained for opening the bank account in abroad bu Nepali Citizen.
  • Provision of reward to information provider as up to 20% of the claim amount realized by the court.
  • Provision of punishment on foreign exchange related offense. Maximum fine up to 3 times of claim amount and imprisonment up to 3 years.
  • Person/B&FIs, firms or company must make foreign exchange transaction only with the licensed company.

What are the punishments

Act ct doing Foreign exchange transaction by violating the provision of acts/rules and directing by any person, firms of an institution is called foreign exchange related offense.

e.g Hundi

Punishment – Fine 3 times of claim amount. If the claim amount is not clear then fine up to 2 lakhs.

In case of violation of export, fine up to 2 times of claim amount.

In case of import, fine up to 3 times of claim amount. For accomplice, half the punishment of the main convicted.

For a constitutional person, political appointed authority, double the punishment but imprisonment only up to extra 2 years.

The weakness of Foreign Exchange Regulating Act

  1. Handed over all rights to NRB.
  2. The tradition of Foreign Exchange use should be increased.
  3. The investigation team should be specialized.
  4. Provision should be in compliance with the money laundering prevention act.