RBI Delegates FEMA Compounding Powers to Regional Offices for Overseas
Investment, Borrowing, Lending and Guarantees, No Decentralisation of Import
and Export Compounding
1.
Objective
o
The Reserve Bank of India (RBI) has delegated
powers to selected Regional Offices to compound certain contraventions under
the Foreign Exchange Management Act (FEMA), 1999.
o
The measure aims to improve customer service and
streamline the processing of compounding applications.
2.
Overseas Investment (ODI) Transactions
o
Applications relating to contraventions involving
overseas investments must be submitted to the RBI Regional Office based on the Unique
Identification Number (UIN) prefix assigned to the foreign entity, overseas
joint venture or wholly owned subsidiary.
|
RBI
Regional Office |
UIN
Prefix |
|
Ahmedabad |
AH |
|
Bengaluru |
BG |
|
Mumbai |
BL, BY,
PJ |
|
Kolkata |
BN, CA,
GA, GH |
|
New
Delhi |
CG, JM,
JR, KA, ND, PT, WR |
|
Hyderabad |
HY |
|
Chennai |
KO, MA |
o
Applications involving overseas investment
contraventions where no UIN has been allotted must be submitted to the
Cell for Effective Implementation of FEMA (CEFA), Foreign Exchange Department,
RBI Central Office, Mumbai.
3.
Borrowing, Lending and Guarantees
o
Compounding applications relating to contraventions
under the applicable FEMA regulations governing:
§ Borrowing
or lending in foreign exchange.
§ Borrowing
and lending in Indian rupees.
§ Borrowing
and lending under the 2018 Regulations.
§ Guarantees
under the 2000 Regulations.
§ Guarantees
under the 2026 Regulations.
o
These applications must be submitted to the RBI
Regional Office having jurisdiction over the registered office of the Indian
company/entity or its place of domicile, as applicable.
4.
Special Rule for Lending and Guarantees Linked to
ODI
o
Where an applicant has undertaken lending or
guarantee transactions in favour of a foreign entity in which it has made an
Overseas Direct Investment (ODI), the compounding application must be submitted
under the overseas investment procedure specified in Section A.
5.
Contraventions Involving Multiple Categories
o
Applications involving contraventions across
multiple transaction categories governed by different rules or regulations,
where compounding powers have been delegated to different offices, must be
submitted to CEFA at the RBI Central Office, Mumbai.
6.
Update to Master Directions
o
RBI will update the Master Directions on Compounding of Contraventions under FEMA, 1999,
dated April 22, 2025, to reflect these changes.
7.
Instructions to Authorised Persons
o
Authorised Dealer (AD) Category-I banks and other
Authorised Persons are required to bring the circular's guidelines to the
notice of their customers.
Effect of
this Circular
·
Decentralisation:
Compounding applications for overseas investment, borrowing, lending and
guarantees can now be handled by designated RBI Regional Offices rather than
being centralised at the RBI Central Office.
·
Simplified filing:
Applicants can determine the appropriate office based on the overseas entity's
UIN prefix or the Indian entity's registered office/domicile, depending on the
transaction category.
·
Important exception: Cases
involving multiple transaction categories assigned to different offices, and
overseas investment cases without a UIN, must be submitted to CEFA at the RBI
Central Office, Mumbai.
[A.P. (DIR Series) Circular
No. 28/2026-27 dated October 23, 2026]
Delegation of Compounding of certain Contraventions under FEMA, 1999 to Regional Offices of the Reserve Bank
Attention of Authorised Dealer (AD) Category - I banks and other Authorised Persons is invited to
i.
A.P. (DIR Series) Circular No. 17/2024-25 dated October 1, 2024 and
ii. Master Directions on Compounding of Contraventions under FEMA, 1999, dated
April 22, 2025
2. As laid down in the above directions, the applications for compounding of contraventions pertaining to transactions related to Overseas Investments and Borrowing and Lending,
and Guarantees are currently being received at Central
Office of the Reserve
Bank. The compounding of contraventions related to certain categories of transactions related to foreign direct investment were being carried out by the Regional Offices
of the Reserve Bank.
3. As a measure
for
promoting customer service,
the powers to compound
contraventions related to Overseas
Investments and Borrowing and Lending, and Guarantees transactions have also been delegated to the select Regional Offices of the
Reserve Bank as follows:
A. Overseas Investment transactions
Compounding applications related to contraventions of provisions under
(i) Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2000 dated May 03, 2000, notified vide Notification No FEMA 19/RB-2000, as amended from time
to time, or
(ii) Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 dated July 07, 2004, notified vide Notification No FEMA 120/RB-2004, as amended from time
to time, or
(iii) Foreign Exchange Management (Overseas Investments) Rules, 2022
dated August 22, 2022, or
(iv) Foreign Exchange Management (Overseas Investments) Regulations,
2022, dated August 22, 2022, notified vide notification No. FEMA 400/2022-RB
(v)
Any other provisions of the Act, rules and regulations issued thereunder, as far as the contraventions are related to underlying overseas investments transactions.
shall be submitted to the following Regional Offices depending on the Unique Identification Number (UIN) assigned to the foreign entity, overseas Joint venture or overseas Wholly Owned subsidiary, as the case maybe,
as mentioned below:
|
Sr. No |
Regional Office |
Prefix of the UIN |
|
1 |
Ahmedabad |
AH |
|
2 |
Bengaluru |
BG |
|
3 |
Mumbai |
BL or BY or
PJ |
|
4 |
Kolkata |
BN or CA or
GA or GH |
|
5 |
New
Delhi |
CG or JM or JR or KA or
ND or PT or WR |
|
6 |
Hyderabad |
HY |
|
7 |
Chennai |
KO or MA |
(vi) The compounding applications in respect of contraventions where no UIN was allotted,
shall be submitted
at Cell for Effective
implementation of FEMA (CEFA),
Foreign Exchange Department, Central Office, Reserve Bank of India, 11th floor,
Central Office
Building, Shahid Bhagat Singh Road,
Fort, Mumbai - 400001.
Compounding applications related to contraventions of provisions under
(i)
Foreign Exchange Management (Borrowing or Lending in
Foreign
Exchange) Regulations, 2000, dated May
03, 2000, and notified vide Notification No. FEMA 3/2000-RB, as amended from time to time,
or
(ii)
Foreign Exchange Management (Borrowing and Lending in Rupees)
Regulations, 2000, dated May 03, 2000, and notified vide Notification No.FEMA.4/2000-RB,
as amended from time to
time, or
(iii) Foreign Exchange Management (Borrowing and Lending) Regulations,
2018 dated December 17, 2018, and notified vide Notification No FEMA 3(R)/RB-2018, as amended from time
to time, or
(iv) Foreign Exchange Management (Guarantees) Regulations, 2000, dated
May 03, 2000, and notified vide Notification No FEMA 8/RB-2000, as amended from time
to time,
or
(v) Foreign Exchange Management (Guarantees) Regulations, 2026 dated
January 06, 2026, and notified vide Notification No FEMA 8(R)/RB-2026, as amended from time
to time.
(vi) shall be submitted by the applicants to the Regional
Offices having jurisdiction
over the registered office of the Indian
company/ entity concerned, or place of domicile,
as the case maybe. The details of the Regional
Offices and their respective
jurisdictions are brought
out in Part C
of Annexure I to the Master Directions on Compounding of Contraventions under FEMA,
1999, dated April 22, 2025.
Note: In case the contraventions pertain to Lending
or Guarantees transactions undertaken by the applicant, towards the foreign entity in which the applicant has made
ODI, the compounding applications shall be submitted
as per ‘A’ above.
C. Compounding applications involving contraventions of multiple
categories of transactions governed by different
sets of rules and/or
regulations (for which powers to compound
have been delegated to different offices) may be submitted at Cell for Effective implementation of FEMA (CEFA),
Foreign Exchange Department, Central Office, Reserve Bank of India, 11th floor,
Central Office Building, Shahid Bhagat Singh
Road, Fort, Mumbai - 400001
4. All AD Category-I banks and other Authorised Persons may bring the guidelines
contained in this
circular to the notice of their constituents.
5. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and/or
without prejudice
to permissions/approval, if any,
required under any other law.