The entire foreign exchange market in India is regulated by Foreign Exchange Management Act, 1999 (FEMA). Before this act was introduced, the market was regulated by FERA or the Foreign Exchange Regulation Act, 1947. After Independence FERA was introduced only as a temporary measure for the purpose of regulating the inflow of foreign capital. But with the industrial and economic development the requirement for conservation of the foreign currency was felt and on Recommendation of Public Accounts Committee, the Indian government passed the Foreign Exchange Regulation Act, 1973 and gradually, this act became well known as FEMA.
The foreign exchange market in India is regulated by the RBI through the Exchange Control Department. The Foreign Exchange Dealers Association ( a voluntary Association) also provide help in regulating the market. The authorised dealer (authorised by RBI) and accredited brokers are qualified to participate in the foreign exchange market in India. When the foreign exchange trade is taking place between authorised dealer and RBI or between Authorised Dealer and Overseas Banks, then broker do not have any role to play.
The Forex Market in India consists of buyers, sellers, market intermediaries and the Monetary Authority of India. Mumbai (the commercial capital of India) is the main centre of for foreign exchange transaction in India. there are many other Centre for foreign exchange transaction in the country such as Chennai, Bangalore, kolkata, New Delhi, Pondicherry and Cochin .
