Module: General Practice
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?
✅ Correct Answer: C
The Reserve Bank of India grants authorization to deal in foreign exchange under Section 10(1) of the Foreign Exchange Management Act (FEMA), 1999.
1. Concept Definition: An "Authorized Person" (AP) is any entity authorized by the RBI to deal in forex.
This includes Authorized Dealers (ADs), Money Changers, and Off-shore Banking Units.
2. Legal Basis: Section 10 specifically deals with "Authorized Persons." It empowers the RBI to authorize persons to deal in foreign exchange "subject to such conditions as may be laid down." 3. Related Context: Section 3 prohibits dealing in forex except through an Authorized Person.
Section 11 empowers RBI to issue directions to these authorized persons.
Section 6 deals with Capital Account Transactions.
4. Causal Reasoning: The licensing power is centralized under Section 10 to ensure the RBI retains control over who enters the forex market, maintaining systemic stability and tracking flows.
1. Concept Definition: An "Authorized Person" (AP) is any entity authorized by the RBI to deal in forex.
This includes Authorized Dealers (ADs), Money Changers, and Off-shore Banking Units.
2. Legal Basis: Section 10 specifically deals with "Authorized Persons." It empowers the RBI to authorize persons to deal in foreign exchange "subject to such conditions as may be laid down." 3. Related Context: Section 3 prohibits dealing in forex except through an Authorized Person.
Section 11 empowers RBI to issue directions to these authorized persons.
Section 6 deals with Capital Account Transactions.
4. Causal Reasoning: The licensing power is centralized under Section 10 to ensure the RBI retains control over who enters the forex market, maintaining systemic stability and tracking flows.