# Key Definitions under FEMA, 1999 — Currency, Exchange and Persons Dealing
All definitions are from Section 2 of FEMA, 1999, and apply 'unless the context otherwise requires'.
## 1. Authorised Person — Section 2(c)
An authorised person means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under Section 10(1) to deal in foreign exchange or foreign securities.
Why it matters: Forex transactions in India must be routed through an authorised person — this is the gate-keeper concept of FEMA.
## 2. Currency — Section 2(h)
Includes:
- All currency notes
- Postal notes, postal orders, money orders
- Cheques, drafts, travellers cheques
- Letters of credit
- Bills of exchange and promissory notes
- Credit cards
- Such other similar instruments as may be notified by the Reserve Bank.
Note the inclusive definition — the RBI can add new instruments through notification.
## 3. Currency Notes — Section 2(i)
Means and includes cash in the form of coins and bank notes.
Narrower than 'currency' — only physical coins/notes.
## 4. Foreign Currency — Section 2(m)
Means any currency other than Indian currency.
Simple and exhaustive — anything not INR is foreign currency.
## 5. Foreign Exchange — Section 2(n)
Means foreign currency AND includes:
(i) Deposits, credits and balances payable in any foreign currency.
(ii) Drafts, travellers cheques, letters of credit, bills of exchange expressed or drawn in Indian currency but payable in any foreign currency.
(iii) Drafts, travellers cheques, letters of credit, bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency.
### Key insight
FEMA looks at the mode of payment, not the currency in which the instrument is expressed. If an instrument is payable in foreign currency, or is drawn from abroad, it is foreign exchange.
## 6. Foreign Security — Section 2(o)
Means any security — in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency — and includes securities expressed in foreign currency where redemption or any form of return (interest or dividends) is payable in Indian currency.
### Distinction at a glance
| Term | Core idea |
|---|---|
| Currency | All instruments serving as money (wide) |
| Currency notes | Physical coins & bank notes (narrow) |
| Foreign currency | Any currency other than INR |
| Foreign exchange | Foreign currency + instruments payable in/from foreign sources |
| Foreign security | Shares/bonds expressed in foreign currency (or where return is in INR) |