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Microlesson · 5-min read

Schedule II - Current Account Transactions Requiring Prior Approval of Specific Ministries

## Schedule II – Current Account Transactions Requiring Prior Approval of Specific Ministry / Department

Under FEMA (Current Account Transactions) Rules, Schedule II transactions require prior approval from the concerned Ministry/Department of the Government of India, not from RBI. These are sector-specific remittances where the relevant administrative ministry vets the purpose before forex is released.

### Mapping of Transactions to Approving Authority

#Nature of RemittanceApproval Required From
1Remittance of freight of vessel chartered by a PSUMinistry of Surface Transport (Chartering Wing)
2Payment of import through ocean transport by a Government Department / PSU on CIF basis (i.e., not FOB)Ministry of Surface Transport (Chartering Wing)
3Remittance by Multi-Modal Transport Operator (MMTO) to its agent abroad (e.g., Blue Dart)Registration certificate from Director General of Shipping (DGS)
4Remittance of hiring charges of transponders for (a) TV channels, (b) Internet Service Providers(a) Ministry of Information & Broadcasting; (b) Ministry of Communication & IT
5Remittance of container detention charges exceeding the rates prescribed by DGSMinistry of Surface Transport
6Remittance of prize money / sponsorship of sports activity abroad exceeding USD 1,00,000 by a person other than International / National / State level sports body (e.g., IPL, NBA prize)Ministry of HRD, Department of Youth Affairs & Sports
7Remittance for membership of P&I ClubMinistry of Finance, Insurance Division

### Key Distinction to Remember

  • CIF imports by Govt/PSU → approval needed (because freight is paid in forex by Indian party).
  • FOB imports → no Schedule II approval (foreign supplier arranges shipping).
  • For sports sponsorship: threshold of USD 1,00,000 triggers the approval; recognised sports bodies (international/national/state) are exempt.

Worked example

### Example 1

Example 1: ONGC (a PSU) charters a foreign vessel and has to pay freight in USD. Does it need approval?

Answer: Yes – freight of vessel chartered by a PSU falls under Schedule II. Approval is required from the Ministry of Surface Transport, Chartering Wing, before remittance.

### Example 2

Example 2: A private cricket league wants to remit USD 1,50,000 as prize money to a foreign player. Is approval needed?

Answer: Yes. Since the remitter is not an international/national/state sports body and the amount exceeds USD 1,00,000, prior approval of the Ministry of HRD, Department of Youth Affairs & Sports is required.

### Example 3

Example 3: Blue Dart (an MMTO) wants to remit charges to its overseas agent. What does it need?

Answer: A Registration Certificate from the Director General of Shipping (DGS) is required to make the remittance.

⚠️ Common exam mistakes

  • Confusing Schedule II (Ministry approval) with Schedule III (RBI approval) – Schedule II transactions do NOT go to RBI.
  • Forgetting that the CIF vs FOB distinction matters – only CIF imports by Govt/PSU need approval.
  • Treating all sports remittances alike – the USD 1,00,000 threshold and the exemption for recognised sports bodies are often missed.
  • Mixing up which Ministry covers what – TV transponders go to Ministry of I&B while Internet transponders go to Ministry of Communication & IT.
Bare-Act text Schedule II read with Rule 4 · FEM (Current Account Transactions) Rules, 2000 · click to expand
Schedule II to the Foreign Exchange Management (Current Account Transactions) Rules, 2000 – Transactions which require prior approval of the Government of India.
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