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Section3
The Foreign Exchange Management Act, 1999

Dealing in foreign exchange, etc

In force From 01 Jun 2000 Act 42 of 1999 As on 15 Oct 2026

Act 42 of 1999 Ministry Finance Enacted 29 Dec 1999 In force 01 Jun 2000 Instruments 15

Section 3 of the Foreign Exchange Management Act, 1999 deals with dealing in foreign exchange, etc. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall-- (a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person; The Act came into force on 01 Jun 2000.

Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall--

(a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person;

(b) make any payment to or for the credit of any person resident outside India in any manner;

(c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner.

Explanation.--For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person;

(d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person.

Explanation.--For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.

Section 3, The Foreign Exchange Management Act, 1999 (Act 42 of 1999).

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

  1. Akshay N. Patel v. Reserve Bank of India

    Supreme Court of India 06 Dec 2021 Binding (SC) Reportable C.A. 6522/2021; Judgement 06.12.2021 (Chandrachud, Vikram Nath & Nagarathna JJ.)

    Court's Decision & Legal Precedent

    FEMA s.3 bars dealing in foreign exchange except as permitted by the Act/rules or RBI; merchanting trade (MTT) involves outward and inward foreign-exchange legs and is regulated by RBI under FEMA ss.3/10/11. COVID PPE MTT restrictions were upheld as proportionate under Arts.14/19(1)(g)/21 in service of foreign-exchange and domestic-stock policy.

    On this section: s.3 dealing in foreign exchange — RBI MTT regulation of FX legs; PPE MTT ban upheld

    Read the full order on eCourts India

  2. Sukhraj Singh vs Sanjiv Kumar @ Gora

    Supreme Court of India 19 Mar 2015 Persuasive (Supreme Court - Non-Binding for Future on Specific Facts; Binding as Reportable

    Court's Decision & Legal Precedent

    The conviction of Sanjiv Kumar under Sections 395, 450, and 342 IPC is legally sustainable as it is supported by credible prosecution evidence including eyewitness testimony, documentary evidence, and investigative findings; the separate acquittal or relief granted to a co-offender in a different proceeding does not invalidate the conviction of another accused if the evidence against that accused is independently reliable and credible; sentencing for criminal offences must balance the need for just punishment with proportionality between the offence and penalty, considering the impact on society and the victim, and mere passage of time since the incident without exceptional circumstances does not warrant further sentence reduction beyond what the trial and appellate courts have determined.

    On this section: False charges of foreign exchange violations were lodged against Sukhraj Singh; the court noted that Wadhawan Forex had valid RBI license for foreign currency transactions, establishing the legitimacy of currency holdings

    Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Made under this section, and citing it

15 instruments name this provision in its title or its text without being made under it.

All subordinate legislation

Questions about Section 3

What have the courts held on Section 3 of the Foreign Exchange Management Act?

Akshay N. Patel v. Reserve Bank of India (06 Dec 2021) is the leading judgment on this section among those set out below: s.3 dealing in foreign exchange — RBI MTT regulation of FX legs; PPE MTT ban upheld. Another 1 judgment on this section is set out below, all of them from the Supreme Court. They run from 2015 to 2021.

How do I find court cases under Section 3 of the Foreign Exchange Management Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Fema 3, section 3 Fema, section 3 of the Foreign Exchange Management Act. People searching for it also type foreign exchange management act fema notification no 3r & 8 and section 3 of foreign exchange management act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Akshay N. Patel v. Reserve Bank of India (06 Dec 2021).

What should I read with Section 3 of the Foreign Exchange Management Act, and has it changed?

15 instruments name it without being made under it, most recently the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017. (2017), then the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015. (2016).

When did Section 3 of the Foreign Exchange Management Act come into force?

Section 3 of the Foreign Exchange Management Act, cited as Fema 3, came into force on 01 Jun 2000, having been enacted on 29 Dec 1999. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.