Foreign Exchange Regulation Act ( FERA) / Foreign Exchange management Act ( FEMA) are rules & regulations made by the Reserve bank of India & approved by both houses of Indian Parliament.
All importers, Exporters, Authorised Forex Dealers, Authorised Money Changers, General Public etc. are supposed to follow these rules to better manage the Forex Reserves of Country so that there is enough resources for import of essential items like Petroleum products. Also it safeguard against money laundering, Under Invoicing, Over Invoicing etc. Proceeds of Export of goods & Services can only come through bank channel, with in a specified time.
Resident Indians cannot keep Forex Money with them and can deal only through authorised dealers in Forex ( mainly banks) appointed by the RBI for their import needs. Any violation can bring involvement of Directorate of Revenue Intelligence ( DRI) or Enforcement Directorate (ED).
