Module: General Practice
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?
✅ Correct Answer: A
Structural Breakdown of Authorized Persons (APs): Under Section 10 of FEMA, the RBI authorizes entities to deal in foreign exchange.
The hierarchy is: 1. AD Category-I (Commercial Banks): Permitted to carry out all current and capital account transactions (subject to specific RBI directions). This is the highest level of authorization.
2. AD Category-II (Upgraded FFMCs, Co-op Banks): Permitted to undertake specified non-trade related current account transactions (e.g., private visits, medical treatment). 3. AD Category-III (Select Financial Institutions): Permitted to undertake specific foreign exchange transactions incidental to their business (e.g., forex for international trade fairs). 4. FFMC (Full Fledged Money Changers): Only purchase of foreign exchange and sale for private/business visits (restricted scope).
The hierarchy is: 1. AD Category-I (Commercial Banks): Permitted to carry out all current and capital account transactions (subject to specific RBI directions). This is the highest level of authorization.
2. AD Category-II (Upgraded FFMCs, Co-op Banks): Permitted to undertake specified non-trade related current account transactions (e.g., private visits, medical treatment). 3. AD Category-III (Select Financial Institutions): Permitted to undertake specific foreign exchange transactions incidental to their business (e.g., forex for international trade fairs). 4. FFMC (Full Fledged Money Changers): Only purchase of foreign exchange and sale for private/business visits (restricted scope).