The minister said the Bill had been brought forward to meet the new situation which had come about with liberalisation and would facilitate better foreign exchange management. The Bill, he emphasised, aimed at facilitating external trade and payments and promoting orderly development and maintenance of foreign exchange market in the country.

The government had already introduced a Bill to prevent money laundering in the last session and it would be appropriate if both the bills were taken up for consideration together, Sinha said.

Opposing the introduction of the Bill, CPM members Basudev Acharia, Rupchand Pal, NN Krishnadas and Moinul Hasan said the Bill was meant to scuttle the Foreign Exchange Regulation Act (FERA) and would benefit money launderers and hawalaoperators.

Describing the fears of the members as "baseless and figment of imagination", the finance minister mentioned that the country's foreign exchange reserves stood at an unprecedented $34 billion. Current account deficit, he said, was less than 1.5 per cent of the GDP in 1998-99 and it would not cross two per cent in the current year despite higher oil import Bill.

The Bill prohibits dealings in foreign exchange except through an authorised person and stipulates that sale or drawal for all current account transactions shall qualify for drawal of foreign exchange from authorised persons.

It empowers the central government to prescribe, in public interest and in consultation with Reserve Bank of India (RBI), reasonable restrictions for such transactions. RBI is also empowered to authorise persons to deal in foreign exchange and in foreign securities and can also revoke authorisation in case of default.

RBI can also impose penalty if the directions given by it are contravened by anyauthorised person and can also inspect the authorised person who shall have to produce all documents required by the inspecting officer.

The bill provides that contravention would be dealt with as civil offences and provides for adjudicating officers to impose penalties.

The bill also lays down the procedure for payment of penalty and the consequences of civil imprisonment for failure to make full payment of the penalty within the specified period and also provides that the detention order shall be executed like a warrant of arrest.

The power to compound offences is vested in the Directorate of Enforcement. Central government officers like assistant director of enforcement or deputy director of enforcement would be the adjudicating authority under the bill.

Appeals can be made against the adjucating authority's orders to Special Director (Appeal). The bill also provides for an Appellate Tribunal where appeals can be made against the orders of adjudicating authority and special director.