Q1 Which of the following best describes the primary objective of the Foreign Exchange Management Act (FEMA), 1999, as stated in its preamble, and how does it fundamentally differ from its predecessor, FERA? Q2 As per Section 1 of FEMA, 1999, the Act extends to the whole of India. Which of the following statements correctly defines its extra-territorial jurisdiction? Q3 With reference to the Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2025 (notified November 2025), consider the following statements regarding export realization: Q4 Under Section 2(v) of FEMA, 1999, a "Person Resident in India" is generally defined as a person residing in India for more than 182 days during the course of the preceding financial year. Who among the following is EXCLUDED from this definition (i.e., treated as a Person Resident Outside India) despite satisfying the 182-day condition? Q5 According to the November 2025 Amendment to the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, what is the specific privilege granted to exporters maintaining foreign currency accounts in International Financial Services Centres (IFSCs) regarding the retention of export proceeds? Q6 FEMA, 1999 operates through a decentralized framework of "Authorized Persons." Which of the following categories of Authorized Persons (APs) is permitted to undertake all current and capital account transactions according to RBI directions? Q7 Consider the following statements regarding the legal nature of contraventions under FEMA: Q8 Scenario: Mr. Arjun, an Indian citizen who has lived in Mumbai all his life, accepts a job offer in London. He leaves India on September 25, 2025, to join his new employment. He does not visit India for the rest of the financial year. Q9 Section 2(e) of FEMA, 1999 defines a "Capital Account Transaction." Which of the following accurately captures the core essence of this definition? Q10 Under the Foreign Exchange Management (Current Account Transactions) Rules, 2000, transactions are categorized into three Schedules based on the nature of restrictions. Which Schedule lists transactions that are completely PROHIBITED? Q11 With reference to the Liberalized Remittance Scheme (LRS) for resident individuals, consider the following statements regarding the permissible limits and tax implications (Tax Collected at Source - TCS) as of the Financial Year 2025-26: Q12 Under Schedule I of the Current Account Transactions Rules, certain remittances are prohibited. For which of the following purposes is the remittance of foreign exchange NOT prohibited? Q13 Consider the following statements regarding the convertibility of the Indian Rupee: Q14 Scenario: Ms. Riya, a resident Indian, wants to gift USD 50,000 to her friend residing in New York. She has already spent USD 210,000 in the current financial year on foreign travel and investing in US stocks. Can she proceed with this gift under LRS? Q15 Which of the following pairs regarding Schedule II (Transactions requiring Central Government Approval) is INCORRECTLY matched? Q16 Scenario: A Resident Individual wants to use the LRS route to purchase a life insurance policy from a foreign insurer. The policy is issued by an insurer in the UK. Is this permitted? Q17 Under the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 (and subsequent 2025 amendments), which of the following is the standard permissible mode for receipt of export proceeds? Q18 With reference to the October 2025 Amendment regarding Merchanting Trade Transactions (MTT), the Reserve Bank of India extended the permissible time period for the "Foreign Exchange Outlay" (the gap between import payment and export receipt). What is the new limit? Q19 Regarding the Exchange Earners’ Foreign Currency (EEFC) Account, which of the following statements is INCORRECT? Q20 As per the June 2025 relaxation concerning Advance Remittance for imports, Authorised Dealer Banks can now allow advance remittance for the import of shipping vessels up to what limit without a Bank Guarantee or Standby Letter of Credit (SBLC)? Q21 Consider the following statements regarding Advance Payments received against Exports under the amended FEMA regulations (Nov 2025): Q22 What is the role of EDPMS (Export Data Processing and Monitoring System) in the FEMA compliance architecture? Q23 Consider the following regarding "Third Party Payments" for Export/Import: Q24 Scenario: An Indian Status Holder Exporter exported goods worth USD 1 Million on January 1, 2026. Under the new regulatory framework (post-Nov 2025), what is the latest date by which he must realize and repatriate the full value of the export to avoid contravention, assuming no specific extension is sought? Q25 Under the FEMA adjudication hierarchy, if a person is aggrieved by an order passed by the Adjudicating Authority (e.g., a Special Director of Enforcement), to whom does the first appeal lie? Q26 Section 13 of FEMA, 1999 prescribes the quantum of penalty for contraventions. If the amount involved in the contravention is quantifiable, what is the maximum penalty that can be imposed? Q27 As per the Foreign Exchange (Compounding Proceedings) Rules, 2024 (which superseded the 2000 Rules), the monetary limit for an Assistant General Manager (AGM) of the RBI to compound a contravention has been significantly enhanced. What is the new limit? Q28 Under Section 37A (introduced later to target illicit assets), if the Authorized Officer has reason to believe that foreign exchange or immovable property is held outside India in contravention of Section 4, what specific action can they take regarding assets within India? Q29 The Foreign Exchange (Compounding Proceedings) Rules, 2024 also revised the application fee structure. What is the new fee required to be paid along with the application for compounding? Q30 Consider the following statements regarding Civil Imprisonment under FEMA: Q31 With reference to appeals to the Appellate Tribunal under FEMA, consider the following statements: Q32 Scenario: Mr. X has been issued a Show Cause Notice by the Directorate of Enforcement (ED) for a contravention involving ₹3 Crores. The adjudication proceedings are currently in progress. Mr. X now wants to apply for Compounding of this contravention to the RBI to settle the matter. Is he eligible? Q33 According to the conceptual framework of the Balance of Payments (BoP), which of the following constitutes the "Acid Test" for classifying a transaction under the Capital Account? Q34 In the structure of India’s Balance of Payments, "Invisibles" are a critical component of the Current Account. Which of the following is NOT a sub-component of Invisibles? Q35 Identify the transaction that will be recorded in the Current Account, despite being related to a foreign investment or loan. Q36 Consider the following international transactions regarding a hypothetical Indian manufacturing firm, "Bharat Motors Ltd." Choose the correct option. Q37 Which of the following pairs is INCORRECTLY matched with its classification in India's Balance of Payments? Q38 "A deficit in the Current Account (CAD) must necessarily be financed by a net surplus in the Capital/Financial Account or a drawdown of Foreign Exchange Reserves." Q39 Scenario: An Indian 'Unicorn' startup, TechVeda, raises $100 Million by selling 15% of its shares to a Japanese Venture Capital fund. Simultaneously, it pays $2 Million as a "facilitation fee" to a Singapore-based investment bank for arranging the deal. Q40 In the context of the International Monetary Fund (IMF), India has accepted the obligations under Article VIII of the IMF Articles of Agreement since August 1994. What does this status signify? Q41 Which expert committee appointed by the Reserve Bank of India laid down the roadmap and preconditions (fiscal deficit, inflation, NPA levels) for moving towards Full Capital Account Convertibility (FCAC)? Q42 Regarding the Liberalised Remittance Scheme (LRS) for resident individuals, identify the correct statements: Q43 Scenario: Mr. Sharma, a resident Indian, wishes to remit INR 15 Lakhs in FY 2025-26 for two different purposes: Q44 Under the Foreign Exchange Management (Current Account Transactions) Rules, 2000, certain transactions are Prohibited (Schedule I). Remittance is NOT allowed for which of the following? Q45 Which of the following routes for Foreign Investment in India is INCORRECTLY described? Q46 "A person resident in India is strictly prohibited from maintaining a Foreign Currency Account (FCA) inside India." Q47 Under which Section of the Foreign Exchange Management Act (FEMA), 1999, does the Reserve Bank of India grant authorization to any person to deal in foreign exchange or foreign securities as an authorized person? Q48 Which of the following correctly lists the four categories of "Authorized Persons" currently under the purview of the RBI's Master Direction on Money Changing Activities? Q49 Consider the following statements regarding the permitted activities of an Authorized Dealer (AD) Category-II: Q50 Full Fledged Money Changers (FFMCs) are authorized to undertake all of the following activities EXCEPT: Q51 Which category of Authorized Dealer is primarily comprised of Select Financial Institutions (such as EXIM Bank and SIDBI) and Factoring Companies, authorized to undertake foreign exchange transactions incidental to their specific business activities? Q52 Identify the statement that INCORRECTLY describes the regulatory requirements for Authorized Persons. Q53 Consider the following statements: Q54 Scenario: "Global Travels Ltd." is an entity licensed as an FFMC (Full Fledged Money Changer). A customer approaches them with an invoice for importing machinery from Germany and requests a foreign currency demand draft (DD) to pay the supplier. Based on FEMA regulations, what is the correct course of action? Q55 According to the extant RBI Master Direction on Money Changing Activities, what is the minimum Net Owned Funds (NOF) required for an entity to apply for a Single Branch Full Fledged Money Changer (FFMC) license? Q56 An existing Full Fledged Money Changer (FFMC) or a Non-Banking Financial Company (NBFC) wishing to upgrade to an Authorized Dealer (AD) Category-II license must generally maintain a minimum Net Owned Funds (NOF) of: Q57 [Updated May 2024] Consider the following statements regarding the RBI's May 2024 instructions on foreign currency note transactions by FFMCs and non-bank AD Category-II entities: Q58 A Full Fledged Money Changer (FFMC) is permitted to Purchase foreign exchange from all of the following sources EXCEPT: Q59 Which of the following transactions are permitted to be undertaken by an AD Category-II entity? Q60 Consider the following statements: Q61 Scenario: Mr. Sharma, a resident Indian, approaches "Fast Forex Ltd." (an AD Category-II licensee) to buy a Forex Prepaid Card of USD 2,000 for his upcoming holiday in Singapore. He also wants to pay for the card in cash (INR). What is the regulatory position? Q62 While FFMCs can purchase foreign currency from residents without limit, what is the maximum limit of foreign currency notes (Cash) that an FFMC can sell to a resident traveler for a private visit to a country (other than Iraq/Libya/Iran/Russia)? Q63 [Updated Jan 2026] With effect from January 1, 2026, how are Authorized Dealer (AD) Category-II entities and Full Fledged Money Changers (FFMCs) required to report "LRS Daily Returns"? Q64 Under the Prevention of Money Laundering Act (PMLA), 2002, and RBI’s Master Direction on KYC, what is the mandatory preservation period for records of transactions and identity (KYC) documents maintained by an Authorized Person? Q65 Which of the following is NOT a correct procedure when an Authorized Person (AP) detects a Counterfeit Note tendered by a customer? Q66 Consider the following statements regarding the "Concurrent Audit" requirements for Authorized Persons: Q67 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: Q68 Consider the following statements regarding Suspicious Transaction Reporting (STR): Q69 Which of the following registers are mandatory for an FFMC to maintain at its branches? Q70 Scenario: An AD Category-II entity's internal audit reveals that they sold USD 10,000 to a resident for a "Gift" remittance without obtaining the resident's PAN. What is the regulatory implication? Q71 Which of the following accurately describes the primary functional difference between an Authorized Dealer (AD) Category-II and an Indian Agent under the Money Transfer Service Scheme (MTSS)? Q72 Consider the following statements regarding the "Franchisee" model in the foreign exchange business: Q73 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? Q74 Consider the following statements: Q75 Under Section 13 of the FEMA, 1999, if an Authorized Person contravenes any provision of the Act (e.g., selling forex for a prohibited purpose), they are liable to a penalty of up to: Q76 Scenario: A foreign tourist is leaving India and approaches an FFMC at the airport to re-convert his unspent Indian Rupees (INR) back into US Dollars. He produces an "Encashment Certificate" issued by a hotel 3 months ago. What is the validity period of an Encashment Certificate for the purpose of re-conversion? Q77 Identify the INCORRECT statement regarding the issuance of Foreign Currency (Forex) Prepaid Cards by Authorized Dealers: Q78 Scenario: An entity is authorized by the RBI to deal in foreign exchange for "specified purposes" but it is neither a Bank nor a full-fledged financial institution. It is primarily a company running a money changing business that has been upgraded. This entity is most likely classified as: Q79 According to Section 2(e) of FEMA 1999, which of the following creates a "Capital Account Transaction"? Q80 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)? Q81 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: Q82 Which section of FEMA 1999 specifically empowers the Reserve Bank of India to authorize persons (Authorized Dealers, Money Changers) to deal in foreign exchange? Q83 Consider the following duties of an Authorized Person (AP) under Section 10 of FEMA. Which statement is CORRECT? Q84 Regarding Section 11 (RBI’s Power to Issue Directions), which of the following statements is legally valid? Q85 Scenario: "TechIndia Ltd," an Indian startup, wants to issue Compulsorily Convertible Debentures (CCDs) to a US-based investor. Simultaneously, "InfraCo," another Indian firm, plans to raise a Foreign Currency Loan (ECB) from a German bank. Q86 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? Q87 Which authority is primarily responsible for investigating contraventions under FEMA (Section 37) and conducting adjudication proceedings? Q88 The Foreign Exchange (Compounding Proceedings) Rules, 2024 (notified in Sept 2024) introduced significant changes to the compounding process. Which of the following statements is CORRECT under the new rules? Q89 Under the Compounding of Contraventions Rules, the RBI can compound all of the following types of contraventions EXCEPT: Q90 If a person fails to pay the penalty imposed by the Adjudicating Authority within 90 days, they are liable for "Civil Imprisonment." Who issues the warrant for this arrest under Section 14? Q91 Regarding the Appeal Mechanism under FEMA (Section 17 & 19), which statement is TRUE? Q92 Scenario: "Alpha Corp" delayed filing its FC-GPR form by 2 years. They applied for compounding to RBI on Jan 1, 2025. The compounding order was passed on Feb 1, 2025. Alpha Corp pays the sum on Feb 10, 2025. Q93 Under the Liberalized Remittance Scheme (LRS), what is the maximum amount a resident individual can remit outside India per financial year for permissible current or capital account transactions? Q94 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: Q95 Under Schedule I of the FEMA (Current Account Transactions) Rules, 2000, remittance for which of the following purposes is STRICTLY PROHIBITED (even under LRS)? Q96 For the specific purpose of the Foreign Exchange Management Act (FEMA), how is a unit set up in an International Financial Services Centre (IFSC) (e.g., GIFT City) treated?