Section 41 FEMA Act 1999 - Power of Central Government to Give Directions

Section 41 of the Foreign Exchange Management Act, 1999 empowers the Central Government to give general or special directions to the Reserve Bank of India for the purposes of FEMA.

Text of Section 41 of the Foreign Exchange Management Act, 1999

41. Power of Central Government to give directions. - For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.

What does Section 41 mean?

Section 41 creates a statutory power of direction between the Central Government and the Reserve Bank of India in relation to FEMA. Where the power is exercised for the purposes of the Act, the Central Government may issue either general directions or special directions to RBI.

The section also places a corresponding duty on RBI: while discharging its functions under FEMA, RBI is required to comply with directions issued by the Central Government under this provision.

In simple terms: Section 41 permits the Central Government to give FEMA-related policy or case-specific directions to RBI, and makes compliance with those directions mandatory for RBI when it performs functions under FEMA.

Key elements of Section 41

1. The power belongs to the Central Government

The statutory authority to issue directions under Section 41 is vested in the Central Government.

2. Directions must be for the purposes of FEMA

The opening words, "For the purposes of this Act", connect the power to the purposes and operation of the Foreign Exchange Management Act, 1999.

3. Directions may be general or special

The provision expressly permits both general directions and special directions. The language therefore accommodates directions of broader application as well as directions addressing a particular matter within the scope of FEMA.

4. RBI must comply while exercising FEMA functions

Section 41 states that RBI shall comply with such directions in the discharge of its functions under FEMA. The provision therefore establishes a binding statutory relationship for directions validly issued under Section 41.

Context within FEMA

The Foreign Exchange Management Act, 1999 is Act No. 42 of 1999. Its stated objective is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market in India. Section 41 appears in Chapter VII, dealing with miscellaneous provisions.

Official legal sources

For the current statutory text and official material, readers should refer to the India Code, the Department of Economic Affairs - Acts and Policies, and the Reserve Bank of India. Where an amendment, notification, rule, regulation or direction applies to a specific transaction, the relevant current instrument should also be checked.

Frequently asked questions

What power does Section 41 FEMA give to the Central Government?

It authorises the Central Government, for the purposes of FEMA, to give RBI general or special directions from time to time.

Is RBI required to follow a direction under Section 41?

Yes. The statutory text provides that RBI shall comply with such directions while discharging its functions under FEMA.

Does Section 41 itself prescribe a penalty?

No. Section 41 is a provision concerning the Central Government's power to give directions to RBI. It does not itself prescribe a penalty for a person undertaking a foreign exchange transaction.