Dealing in foreign exchange restrictions bar unauthorized transfers and off market payments, requiring use of authorised channels.

Section 3 restricts dealing in or transferring foreign exchange or foreign securities to non authorised persons and forbids payments to or for the credit of persons resident outside India, as well as receiving payments by order or on behalf of non residents otherwise than through an authorised person; "transfer" covers sale, purchase, exchange, mortgage, pledge, gift, loan and other transfers, while "financial transaction" covers payments, receipts by order, bills of exchange, promissory notes, securities transfers and acknowledgements of debt, and the provision targets off market and hawala type settlements, with a narrow exception for postal and money orders.

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