The monetary penalty payable under FERA was nearly ___________times the amount involved.

The correct answer is B. Five because, under the Foreign Exchange Regulation Act (FERA), the monetary penalty payable was typically set at approximately five times the amount involved in the violation or offense. FERA was a legislation in India that aimed to regulate and control foreign exchange and foreign payments.

One of the key features of FERA was the imposition of stringent penalties, and one common penalty rule was to require the offender to pay a penalty of approximately five times the amount involved in the violation. Let’s explore in detail why Option B is the correct choice and why the other options (A. Three, C. Two, and D. Six) are not accurate in this context.

B. Five (Correct):

Under FERA, the penalty imposed for various offenses related to foreign exchange violations was set at approximately five times the amount involved in the violation. This penalty provision was intended to act as a significant deterrent against illegal foreign exchange transactions and violations.

The fivefold penalty was a notable characteristic of FERA and contributed to the strict enforcement of foreign exchange regulations during the period when the act was in force.

Now, let’s examine why the other options are not correct in this context:

A. Three (Not Correct):

The penalty under FERA was not typically set at three times the amount involved. While some countries and legal systems may use a threefold penalty in certain cases, it was not the standard practice under FERA in India. FERA was known for its stringent penalties, which were often set at a higher multiple of the amount involved.

C. Two (Not Correct):

FERA did not typically set the penalty at two times the amount involved in foreign exchange violations. The purpose of FERA was to discourage and penalize foreign exchange violations, and it did so by imposing much higher penalties, typically around five times the amount involved.

D. Six (Not Correct):

Similarly, the penalty under FERA was not generally set at six times the amount involved. While the exact multiple may have varied depending on the specific violation, it was commonly understood to be approximately five times the amount involved.

In summary, the correct answer is B. Five because, under the Foreign Exchange Regulation Act (FERA) in India, the monetary penalty payable for foreign exchange violations was set at around five times the amount involved in the offense.

This served as a significant deterrent against illegal foreign exchange activities and contributed to the enforcement of foreign exchange regulations during the period when FERA was in effect.

The other options, such as three, two, and six, do not accurately represent the standard penalty provision under FERA and may not reflect the actual practice of foreign exchange regulation during that time.

Understanding the penalty provisions under FERA is important for understanding the regulatory framework that existed in India before the introduction of the Foreign Exchange Management Act (FEMA).