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State if the following statements are True orFalse:

1. Under FEMA, the Central Government has been empowered to frame regulations under Act.

2. Exchange rate refers to the rate at which currency of one country gets converted into that of

another country.

3. Violation of FEMA provisions is a criminal offence.

4. Commercial banks authorised to deal in foreign exchange are classified as Authorised Dealers-

Category 1.

5. Restricted money changers function as agents of AD-Category III.

6. The correspondent relationship between banks is also known as agency arrangement.

7. A full-fledged money changer can deal with exporters, but not with importers.

8. Exchange control refers to restriction on imports and exports.

9. The practice of exchange control is unique to India.

10. Authorised Dealers-Category II are not members of FEDAL

Fill in the blanks:

11. The authorised dealers under FEMA are classified into________ categories.

12. Banks carry out the function of collection of export bill using the services of____ in the

importing country.

13. The term 'Loro account' means_________ .

14. Under FEMA, all _______account transactions are free unless specifically restricted.

15. The responsibility for administering the FEMA is vested with_________ .

16. In the International Division of a bank, the trading in foreign exchange is done on behalf of

the bank by_________.

Choose the best alternative:

17. Under FEMA, the Reserve Bank of India has been authorised to make to carry out the

provisions of the Act.

(a) rules (b) regulations (c)both rules and regulations (d) notifications.

18. Foreign exchange transactions involve monetary transactions

(a) among residents of the same country.

(b)between residents of two countries only.

(c)between residents of two or more countries.

(d) among residents of at least three countries.

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19. Which of the following statements is true?

(a) Foreign exchange leads to foreign trade.

(b) Foreign trade leads to foreign exchange.

(c)No foreign exchange is involved in foreign trade.

(d) There is no link between foreign trade and foreign exchange.

20. A foreign currency account maintained by a bank abroad is its

(a)Nostro account.

(b) Vostro account.

(c) Loro account.

(d) Foreign bank account.

21. 'Non-resident Bank Accounts' refer to

(a)Nostro accounts.

(b) Vostro accounts.

(c) Accounts opened in offshore centres.

(d)None of the above.

22. The number of Nostro accounts that can be maintained by a bank in a particular currency is

(a) One.

(b)Not exceeding three.

(c) Minimum two

(d)No such limit.

23. on-resident bank accounts are maintained in

(a) The permitted currencies.

(b) The currency of the country of the bank maintaining the account.

(c) The currencies in which FCNR accounts are permitted to be maintained.

(d) Indian rupee.

24. The statutory basis for administration of foreign exchange in India is

(a) Foreign Exchange Regulation Act, 1973

(b) Conservation of Foreign Exchange and Prevention of Smuggling Act.

(c) Foreign Exchange Management Act, 1999.

(d) Exchange Control Manual.

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25. Full fledged money changers are authorized to undertake

(a) Only sale transactions.

(b) Only purchase transactions.

(c) All types of foreign exchange transactions.

(d) Purchase and sale of foreign currency notes, coins and travellers cheques.

26. Restricted money changers can

(a) Purchase and sell travellers cheques.

(b) Deal in foreign exchange transactions of all kinds up to a certain limit.

(c) Deal only in currencies approved by RBI.

(d) Purchase foreign travellers cheques and notes and coins.

27. Authorised dealers-Category I in India are

(a) All scheduled commercial banks in India.

(b) All public sector banks in India.

(c) The banks that have been authorised by RBI to deal in foreign exchange.

(d)None of the above.

28. The acronym FEDAI stands for

(a) Foreign Exchange Dealers' Association of India.

(b) Federal Export Dealers' Association of India.

(c) Fixed Earners' Draft Agreement on Interest.

(d)None of the above.

29. In India the rates of charges for foreign exchange business to be recovered by banks from

their customers are determined by

(a) Reserve Bank of India

(b) FEDAI.

(c) FEDAI in consultation with IBA.

(d) the bank concerned.

30. An authorised person under FEMA does not include

(a) an authorised dealer.

(b) an authorised money changer.

(c) an off-shore banking unit.

(d) an exchange broker.

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31. Amendments to FEMA regulations are communicated by Reserve Bank in the form of

(a) AD (MA Series) Circulars.

(b) AD (GP Series) Circulars.

(c) AP (Dir Series) Circulars.

(d)public notices.

32. FEDAI rules do not cover

(a) hours of business of foreign exchange market.

(b) interest for late settlement interbank dealings.

(c) forward contracts with customers.

(d) none of the above.