RBI Notifies Revised Guidelines for Compounding of Contraventions under
FEMA, 1999
[FED Master Direction
No.04/2025-26 dated April 22, 2025]
Master Directions - Compounding of Contraventions
under FEMA, 1999
The provisions of section 15 of Foreign Exchange
Management Act, 1999 (42 of 1999) [hereinafter referred to as ‘FEMA, 1999’], enable
compounding of contraventions and, empowers the Reserve Bank to compound any contravention
as defined under section 13 of the FEMA, 1999, except the contraventions under section
3 (a) of FEMA, 1999, on an application made by the person committing such contravention.
Government of India vide Notification G.S.R. 566 (E). dated September 12, 2024,
has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 in supersession
of the Foreign Exchange (Compounding Proceedings) Rules, 2000.
2. Instructions issued on "Compounding
of Contraventions under FEMA, 1999" have been compiled in this Master
Direction. The list of underlying circulars/ notifications which form the basis
of this Master Direction is furnished in the Appendix.
3. Further, in terms of Section 11 (2) of
FEMA, 1999, the Reserve Bank may, for the purpose of ensuring the compliance with
the provisions of the Act or of any rule, regulation, notification, direction or
order made thereunder, direct any authorized person to furnish such information,
in such manner, as it deems fit. Authorised Dealers are
therefore, advised to take necessary steps to ensure that checks and balances are
incorporated in systems relating to dealing with and reporting of foreign exchange
transactions so that contraventions of provisions of FEMA, 1999, attributable to
the Authorised Dealers do not occur. In this connection,
it is reiterated that in terms of Section 11(3) of FEMA, 1999, the Reserve Bank
may impose on the authorized person a penalty for contravening any direction given
by the Reserve Bank under this Act or failing to file any return as directed by
the Reserve Bank.
4. All AD Category – I banks and Authorised banks may bring the guidelines contained in this
circular to the notice of their constituents.
Guidelines for compounding of
contraventions under FEMA, 1999
INDEX
|
Description |
|
1. General |
|
2. Compounding of
contraventions by Reserve Bank |
|
3. Application for
Compounding |
|
4. Cases not eligible for
compounding |
|
5. Procedure for
Compounding |
|
6. Issue of Compounding
order |
|
7. Payment of the amount
for which contravention is compounded |
|
Annexure I - Details for
payment of Compounding application fee and compounding amount. |
|
Annexure II - Details of
transactions relating to Foreign Direct Investment, External Commercial
Borrowings, Overseas Direct Investment and Branch Office / Liaison Office |
|
Annexure III - Undertaking
in relation to status of investigation by Directorate of Enforcement |