This document provides guidance on compounding of contraventions ...

Foreign Exchange Violations: Path to Compounding under FEMA.

Circulars     FEMA

October 3, 2024

This document provides guidance on compounding of contraventions under the Foreign Exchange Management Act (FEMA), 1999. It outlines the process, eligibility criteria, and computation matrix for determining the compounding amount payable for various types of contraventions. Key points: - Certain contraventions related to foreign investment, external commercial borrowings, overseas investment, and branch/liaison offices can be compounded by RBI's Regional Offices. - Applicants must submit a compounding application along with the prescribed fee of Rs. 10,000 plus GST. - Cases involving serious contraventions like money laundering, terror financing, or affecting national sovereignty are not eligible for compounding. - The compounding amount is calculated based on factors such as the sum involved, duration of contravention, undue gains made, and repetitive nature of the contravention. - A detailed computation matrix with formulas is provided for calculating the compounding amount for different types of contraventions. - The compounding authority will pass an order after giving the applicant an opportunity for a personal hearing. - The compounded amount must be paid within 15 days from the date of the compounding order. - Summary information about compounding orders will be hosted on RBI's website. The document also covers procedural aspects like submission of applications, payment modes, and issuance of compounding orders.

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