No, holding foreign currency is not illegal in India. However, there are certain limits and regulations that govern the amount of foreign currency an individual can hold or carry while traveling abroad.
Detailed response to your query
While holding foreign currency is not illegal in India, it is subject to certain regulations and limitations. The Reserve Bank of India (RBI) is the governing body responsible for overseeing foreign exchange transactions and enforcing these regulations. Here are some interesting facts and details on the topic:
Foreign Exchange Management Act (FEMA): The FEMA, enacted in 1999, serves as the legal framework for regulating foreign exchange transactions in India. It aims to facilitate external trade and payments and promote orderly development and maintenance of the foreign exchange market.
Limits on holding foreign currency: According to the RBI regulations, an individual resident in India can hold foreign currency up to USD $2,000 or its equivalent in other foreign currencies without any declaration. Any amount beyond this limit requires the individual to declare the foreign currency holdings to the Customs authorities.
Carrying foreign currency while traveling: When traveling abroad, Indian residents are allowed to carry foreign currency notes or traveler’s cheques up to USD $3,000 or its equivalent in other foreign currencies. Amounts exceeding this limit must be declared to the Customs authorities at the time of departure or arrival.
Regulations for non-resident Indians (NRIs): NRIs have greater flexibility in holding and repatriating foreign currency. They can open and maintain foreign currency accounts in India, hold foreign currency up to USD $2,000 during visits to India, and remit funds abroad without restrictions.
Quoting Mahatma Gandhi on currency: In the context of holding foreign currency, an interesting quote by Mahatma Gandhi comes to mind: “It is easy to see why the British found it necessary to cover India with an elaborate network of institutions like police, courts, garrisons, and above all, without which foreign capital could hardly have been induced to stay in the country.”
To summarize, while holding foreign currency is not illegal in India, individuals need to adhere to limits and regulations set by the RBI. It is always advisable to stay informed about the current regulations and comply with them to ensure a smooth and legal foreign exchange experience.
Regulations on Holding Foreign Currency in India:
|Currency Held by Residents|
|Currency Carried While Traveling|
|India has a floating exchange rate system whereby the value of the Indian Rupee is determined based on market forces and fluctuates accordingly.|
Additional responses to your query
A resident of India can possess foreign currency in the form of coins. There is no particular limit imposed by the RBI or the Authorised Person. Foreign currency, which is not in the form of coins, can be possessed by a resident of India.
The Reserve Bank of India (RBI) is the regulator of foreign exchange dealings in India. It prohibits, restricts, and regulates the opening, holding and maintaining of foreign currency accounts, and the limits up to which a person resident in India can hold the amount in such accounts.
Watch a video on the subject
In this YouTube video, titled “exchanging foreign currency,” Dr. Zakir Naik discusses the permissibility of forex trading in Islam. He explains that if individuals adhere to Sharia rules and avoid engaging in prohibited activities, such as interest or gambling, forex trading can be considered permissible. However, Dr. Zakir Naik warns that on a broader scale, forex trading often involves haram elements like borrowing with interest, futures, and options, making it impermissible. He emphasizes the significance of abstaining from haram activities and using personal funds for spot transactions to ensure permissibility.