In a bid to reduce transaction costs, the government on Friday decided to dispense with Reserve Bank of India nod for several current account transactions and amend FEMA (Foreign Exchange Management Act) to empower the apex bank to impose penalties in case of violation of forex deals excepting hawala transactions.
Remittances by artists and for advertisements, royalty payments, purchase of trademarks, commission to real estate agents and health insurance from abroad would no longer require RBI clearance.
An official release said the Foreign Exchange Management Act would be amended to empower the RBI to compound contraventions except in case of hawala transactions, which would continue to be vested with the Enforcement Directorate.
RBI would be able to impose penalties for violation of FEMA except under Section 3(a), which mainly deals with hawala transactions.
The liberalisation of current account transactions comes in the wake of burgeoning forex reserves now at over $104 billion.
Companies would no longer require RBI permission for extending short term credit to their overseas offices.
Remittances by wrestlers, dancers, entertainers and other artists would no longer require RBI nod.
Similar payments for buying a personal insurance scheme from a foreign insurer could also be carried out freely.
Commission to agents abroad for sale of residential and commercial plots up to 5.0 per cent or $25,000 would not require RBI nod.
Remittances for ads in foreign TV channels by persons whose export earnings are less than Rs 10 lakh (Rs 1 million) were barred so far. The ceiling is being lifted.
Non-exporters are also eligible for such remittances for ads in foreign TV channels.
Remittances for use of and purchase of trademarks franchisees in India would not require RBI permission from now.
