Rapid revision
Test one fact at a time:open a card, recall the direct answer, then practise it in MCQ format.
What is the role of EDPMS (Export Data Processing and Monitoring System) in the FEMA compliance architecture?
Direct Answer
It is an IT-based system for monitoring export of goods and software and facilitating reconciliation of export proceeds with Customs data.
To renew an existing FFMC or AD Category-II license, the application for renewal must be submitted to the Reserve Bank of India at least:
A person resident in India who has returned from a trip abroad must surrender unspent foreign currency notes to an Authorized Person within what time frame?
Identify the INCORRECT statement regarding the issuance of Foreign Currency (Forex) Prepaid Cards by Authorized Dealers:
Direct Answer
Unspent balances on Forex cards can be refunded to the user in cash (INR) without any limit.
Following the amendments by the Finance Act, 2015 (effective October 2019), who holds the power to frame rules regarding "Non-Debt Instruments" (e.g., Equity, FDI)?
Under Section 6(3) of FEMA 1999 (as amended), the Reserve Bank of India may prohibit, restrict, or regulate all of the following transactions EXCEPT:
Direct Answer
Transfer or issue of equity shares of an Indian company to a person resident outside India (FDI).
Which section of FEMA 1999 specifically empowers the Reserve Bank of India to authorize persons (Authorized Dealers, Money Changers) to deal in foreign exchange?
Consider the following duties of an Authorized Person (AP) under Section 10 of FEMA. Which statement is CORRECT?
Direct Answer
An AP must satisfy itself that the transaction is compliant with the Act and must refuse to undertake the transaction if the client refuses to provide a declaration.
Under Section 13 of FEMA 1999,
what is the maximum quantitative penalty that can be imposed if the amount involved in the contravention is quantifiable?
Which authority is primarily responsible for investigating contraventions under FEMA (Section 37) and conducting adjudication proceedings?
Regarding the Appeal Mechanism under FEMA (Section 17 & 19), which statement is TRUE?
Direct Answer
An appeal against the order of the Adjudicating Authority lies to the Special Director (Appeals) or the Appellate Tribunal, depending on the designation of the officer.
According to the Foreign Exchange Management (Overseas Investment) Rules, 2022, the total "Financial Commitment" made by an Indian Entity in all foreign entities shall not exceed:
Direct Answer
400% of its Net Worth as on the date of the last audited balance sheet.
Which specific section of the FEMA, 1999 empowers the Reserve Bank of India to compound contraventions, and which recent set of rules currently governs this process?
What is PRAVAAH, and what role does it play in the updated (2024-25) Compounding ecosystem?
Direct Answer
It is the secure web-based portal for online submission of compounding applications and regulatory approvals.
FEMA, 1999 was enacted by the Parliament in 1999, but it came into force on a specific date notified by the Central Government. What is that effective date?
With reference to Section 5 of FEMA 1999 regarding Current Account Transactions,
identify the correct legal position:
Direct Answer
Current account transactions are freely permissible unless specifically prohibited or restricted by the Central Government
Under Section 40 of FEMA 1999, the Central Government has the power to suspend the operation of which specific provisions of the Act in public interest?
What is the defining characteristic of a "Merchanting Trade Transaction" (MTT) under RBI FEMA regulations?
Direct Answer
Goods are shipped from an overseas supplier to an overseas buyer without entering the Domestic Tariff Area (DTA) of India.
When a Payment Aggregator (PA-CB) receives export proceeds in its "Export Collection Account" (ECA), within what timeframe must these funds be settled to the Indian exporter's account?
Which authority has the power to remove an exporter's name from the Caution List once the outstanding shipping bills are fully realized or written off?
When a bank finances exports sent on a "Consignment Basis", at what stage is the Post-Shipment credit typically adjusted/liquidated?
Direct Answer
Only when the goods are actually sold by the overseas agent/consignee and proceeds are realized.
What is the standard regulatory limit for the payment of Agency Commission to overseas agents by AD Banks without needing specific RBI approval (provided it is declared in the shipping documents)?
What is the primary function of the "Standard Policy" (Shipments Comprehensive Risks Policy) issued by ECGC to exporters?
Direct Answer
To protect the exporter against the risk of non-payment by the overseas buyer due to commercial and political risks.
What is the fundamental legal difference between "Export Factoring" (specifically Non-Recourse Factoring as offered by ECGC) and "Export Bill Discounting"?
Direct Answer
Factoring involves the outright sale/assignment of accounts receivable to the Factor (typically without recourse), whereas Bill Discounting is a borrowing transaction (with recourse).
Which specific ECGC policy is designed to cover Indian contractors executing civil engineering construction works abroad against the risk of non-payment of running bills?
Which International Chamber of Commerce (ICC) publication currently governs the handling of Clean and Documentary Collections globally?
What is the key difference between a "Bill of Lading" (Article 20) and a "Multimodal Transport Document" (Article 19)?
Direct Answer
A Bill of Lading covers only sea transport; a Multimodal document covers at least two different modes of transport (e.g., Truck + Ship).
What is the primary relationship between the International Standard Banking Practice (ISBP 821) and the Uniform Customs and Practice for Documentary Credits (UCP 600)?
Direct Answer
ISBP 821 provides an interpretation of how the provisions of UCP 600 are to be applied in daily practice
What is the minimum amount of insurance coverage required under UCP 600 Article 28 if the credit does not stipulate a percentage?
What is the correct handling of a "Non-Documentary Condition" under UCP 600 Article 14(h)? (e.g., The credit states "Goods must be of high quality" but does not require a Quality Certificate).
Direct Answer
The bank will deem such a condition as not stated and will disregard it
According to Section 126 of the Indian Contract Act, 1872, a "Contract of Guarantee" involves three specific parties. Who are they?
Direct Answer
A guarantee involves the Principal Debtor, the Creditor, and the Surety. 2
Which specific type of Bank Guarantee is issued to ensure that a bidder does not withdraw their bid during the tender process or refuse to sign the contract after being awarded the project?
Direct Answer
This is a Bid Bond (also known as an Earnest Money Deposit / EMD Guarantee). 2
What is the primary purpose of a "Deferred Payment Guarantee" (DPG) in the context of capital goods acquisition?
When the Forward Rate of a currency is higher than its Spot Rate, the currency is said to be trading at a:
Direct Answer
Premium.
Concept:Forward Rate Terminology.
Definitions:
Premium:If the Future Price is higher than the Current Price. (Example: Spot is 91, Forward is 92). This typically happens when the currency has a lower interest rate than the currency it is being compared to.
Discount:If the Future Price is lower than the Current Price. (Example: Spot is 91, Forward is 90).
Par:If the Forward Rate is exactly the same as the Spot Rate.
When calculating cross rates, the US Dollar acts as the intermediary for the vast majority of transactions.
What is the technical term for the US Dollar in this role?
Direct Answer
The Vehicle Currency.
Concept:Vehicle Currency Function.
Logic:A "Vehicle Currency" is a highly liquid currency used to facilitate trade between two less liquid currencies.
Stat:The US Dollar is on one side of approximately 88 percent of all global forex trades. It acts as the "hub" in the global trading network.
What is the specific reporting threshold for filing a "Cross Border Wire Transfer Report" (CBWTR) to the FIU-IND?
Direct Answer
All cross-border wire transfers of the value of more than 5 Lakh Rupees.