The bill, to replace FERA, is aimed at consolidating and amending the law relating to foreign exchange with the object of facilitating external trade and payment. It will also help promote orderly development and maintenance of the foreign exchange market in India.

Under the provisions of the Bill, payment to any person in India or a non-resident Indian without a corresponding inward remittance would be deemed as unauthorised.

Detailing the penalty provisions, the bill says violators of the foreign exchange regulations would be liable to pay a penalty of up to three times the sum involved or up to Rs two lakh when the amount cannot be quantified.

The proposed law says when such a contravention is a continuing one,an additional penalty extending up to Rs 5,000 a day will be imposed.

However, a defaulter cannot be arrested or detained unless an adjudicating authority has served a show cause notice upon him asking him why he should not be sent to prison.

The bill, however, empowered the authority to issue arrest warrants against the defaulters if they, after issuance of the notice, transferred property dishonestly or attempted to abscond or leave the jurisdiction of the authority.

At the same time, a defaulter will be released by the arresting officer `at once' on payment of the amount entered in the arrest warrant as due and costs of the arrest. This is in response to a long pending demand of industry and trade to eliminate legal wrangles and harassment.

The Bill makes it mandatory that an arrested defaulter should be brought before the adjudicating authority as soon as possible or within 24 hours of his arrest, whichever is earlier.

If any person fails to make full payment of the penalty imposed on himwithin a period of 90 days, he would be liable for civil imprisonment, the bill proposed.