Which one of the following statements is correct with reference to FEMA in India?

The Foreign Exchange Management Act (FEMA) was enacted in 1999 to replace the Foreign Exchange Regulation Act (FERA) and came into force with effect from 1 June 2000 [1]. A major shift under FEMA was the decriminalisation of most contraventions: violations are treated as civil offences with administrative adjudication, compounding and appellate mechanisms rather than as criminal offences under FERA. Although the Directorate of Enforcement (ED) continues to be involved in investigating foreign exchange matters established under the statute, the punitive criminal arrest-and-prosecution machinery characteristic of FERA no longer applies to routine FEMA contraventions [2]. Hence statement (3) is correct.

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 3. Regulation of Foreign Exchange Market, Govt. Securities Market and Money Market > p. 67
2. [2] https://dor.gov.in/foreign-exchange-management-act-1999-42-1999