Foreign Exchange Regulation Act, 1947 – Overview and Key Provisions
The Foreign Exchange Regulation Act, 1947 (FERA) is a significant legal framework that governs all foreign exchange transactions in Bangladesh. Originally enacted during the British era, the law has been amended and enforced by Bangladesh Bank to regulate the flow of foreign currency and maintain economic stability.
Purpose of the Act
- To regulate dealings in foreign exchange and securities.
- To control import and export of currency and bullion.
- To ensure proper usage of foreign exchange for trade and services.
Scope of Application
The Act applies to:
- All citizens and residents of Bangladesh.
- Any foreign company or organization operating within Bangladesh.
- Transactions taking place between residents and non-residents.
Key Provisions
1. Control Over Foreign Exchange
- All foreign exchange transactions must be routed through authorized dealers approved by Bangladesh Bank.
- Any dealings without permission are deemed illegal.
2. Regulation of Payments
- Remittances for trade, travel, education, or medical purposes must be approved by Bangladesh Bank or its agents.
- Residents cannot make payments to non-residents without authorization.
3. Restrictions on Export and Import of Currency
- Limits are imposed on how much foreign currency a person can carry while entering or exiting Bangladesh.
- Violation of currency limits is subject to confiscation and legal action.
4. Foreign Investment & Repatriation
- Foreign investors must obtain approval for capital investment in Bangladesh.
- Repatriation of profits or capital is allowed with prior approval under FERA rules.
5. Reporting Requirements
- Businesses dealing with foreign exchange must maintain proper records and submit periodic reports to Bangladesh Bank.
- Failure to report accurately can result in penalties or cancellation of licenses.
Enforcement Authority
Bangladesh Bank is the sole regulatory and enforcement authority for foreign exchange matters in Bangladesh. It issues circulars, licenses, and guidelines under FERA to commercial banks and financial institutions.
Penalties for Violations
- Confiscation of foreign currency.
- Fines or imprisonment for illegal forex dealings.
- Cancellation of licenses or business operations involved in violations.
Recent Updates
Bangladesh Bank continuously updates forex transaction rules and limits via circulars. Stakeholders must follow the official website for the latest updates and instructions.
Conclusion
The Foreign Exchange Regulation Act, 1947 plays a vital role in safeguarding Bangladesh’s foreign currency reserves and ensuring lawful international transactions. Banking professionals, exporters, importers, and foreign investors should understand this law thoroughly to avoid regulatory issues.
