The Foreign Exchange Management Law (FEMA) was enacted on 10 August 2010 to empower the Central Bank to play a key role in supporting and regulating the foreign exchange market.
Domestic payments in foreign currencies, international payments and transfers In foreign exchange, and purchases and sales of foreign exchange in the country are regulated under this law.
FEMA provides that for “ordinary transactions”, no limitations will be imposed on transfer of money into and out of the country. The ordinary transactions include
Payments to be made in connection with foreign trade, services, ordinary short-term banking and credit facilities;
Payments to be made as interest on loans and net income from investments
Loan repayment
Reasonable remittance for family expenses.
Other payments are defined as “capital transactions”.