Compounding of contraventions: framework allowing voluntary settlement subject to eligibility, procedure, and payment requirements.
The Master Direction consolidates RBI's framework for compounding of contraventions under FEMA, 1999 and the Compounding Rules, 2024, setting eligibility and exclusions (including non-compoundable categories such as Section 3(a), repeat contraventions within three years, unquantifiable amounts, and matters involving suspected money laundering or DoE objections). It prescribes filing and jurisdictional rules, application content and fees, required administrative corrective actions, procedures for assessment, factors influencing compounding amounts, a computation matrix with fixed and variable components and ceilings, hearing protocols, payment mechanisms, and publication of compounding orders.

Compounding of contraventions under FEMA: fresh applications not linked to prior orders; additional payment details required for reconciliation.
The amendment removes the provision linking the compounding amount payable in a subsequent application to any earlier compounding order, treating such filings as a fresh application with an independently determined compounding amount. Additionally, applicants paying electronically must provide mobile contact details, the Reserve Bank office that received payment, and the mode of application submission to aid reconciliation and expedite processing.

Bonus share issuance to non-resident shareholders permitted where shareholding proportions remain unchanged under FDI restrictions.
An Indian company engaged in a sector prohibited for FDI may issue bonus shares to pre-existing non-resident shareholder(s) provided that the shareholding pattern of the pre-existing non-resident shareholder(s) does not change as a consequence of the issuance. Issuance must comply with applicable laws, rules, regulations and guidelines and the clarification will be effective from the date of the relevant FEMA notifications.

Validity period for prior permission under FCRA set for receiving and utilisation with extensions and penalties for violations.
The Central Government prescribes that prior permission to accept foreign contribution is valid to receive funds for three years and to utilise funds for four years from approval; for prior approvals with remaining periods exceeding three years these limits are reckoned from the date of this order. The competent authority may allow case-by-case extensions, and any receipt or utilisation beyond prescribed or extended periods constitutes a violation under the FCRA, 2010.

FPI investment limits updated: percentage caps on government, state and corporate debt and CDS notional sale caps.
FPI investment limits for 2025-26 retain existing percentage caps on outstanding stocks for government securities, state government securities and corporate bonds; all eligible investments in specified securities are to be reckoned under the Fully Accessible Route. Allocation between General and Long term sub categories for G Secs remains 50:50; the absolute increase for SGSs is assigned to the General sub category. Revised absolute limits for two half year periods and an additional aggregate cap on CDS notional sales by FPIs are notified.

IEM eligibility revised: higher investment and turnover thresholds required for large-scale enterprises; applications via G2B portal.
Revisions raise the eligibility criteria for Industrial Entrepreneur Memorandum (IEM) acknowledgment by increasing investment in plant and machinery and annual turnover thresholds, effective 1 April 2025. IEM acknowledgment applies to large-scale industries not subject to compulsory industrial licensing and to enterprises whose investment or turnover exceed the revised MSME limits. Eligible enterprises should apply for IEM acknowledgment through the G2B portal in accordance with the updated criteria.

Extension of FCRA registration validity continues pending renewal, ending on disposal of application or interim government deadline.
Certificates previously extended and those expiring during the interim period are extended until the earlier of final disposal of the renewal application or an interim government cutoff date; refusal of a renewal application causes the certificate to be deemed to have expired on the date of refusal, preventing receipt or utilisation of foreign contribution.

Local currency settlement permitted: Indian rupee and Maldivian rufiyaa allowed alongside ACU mechanism for bilateral trade.
India-Maldives bilateral trade may be settled in Indian Rupee and/or Maldivian Rufiyaa in addition to the ACU mechanism, pursuant to the November 2024 Memorandum of Understanding; the change applies to trade transactions governed by the specified provision of the FEMA (Manner of Receipt and Payment) Regulations, 2023, takes effect immediately, and is issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, with AD Category I banks required to inform their constituents and observe any other statutory permissions.

Line of Credit support enables export financing for high-speed guard boats subject to export documentation and FEMA compliance.
A Line of Credit from Exim Bank to Vietnam finances procurement of high-speed guard boats from India; eligible exports must meet Foreign Trade Policy criteria, be declared in the Export Declaration Form/Shipping Bill per RBI instructions, and adhere to the LoC's disbursement timetable. Agency commission is not payable from the LoC; exporters may use their own funds or EEFC balances for commission in free foreign exchange, with AD Category-I banks allowed to remit after full export value realization and compliance with applicable instructions. Directions are issued under FEMA without prejudice to other required approvals.

Government-supported line of credit enables procurement of offshore patrol vessels, subject to export eligibility and RBI declaration rules.
A Government-supported Line of Credit from Exim Bank enables procurement of four Offshore Patrol Vessels in the borrower's country; exports under the facility must meet the Foreign Trade Policy and LoC eligibility. The LoC is effective from January twentieth and limits disbursements to a period ending sixty months after scheduled project completion. Shipments must be declared via Export Declaration Form/Shipping Bill per RBI instructions. No agency commission is payable under the LoC; exporters may pay commissions from own resources or EEFC balances in free foreign exchange, subject to extant rules and AD Category-I bank compliance. The directions are issued under FEMA and do not affect other required approvals.

Invalid FCRA registration prohibits receipt or utilisation of foreign contribution; transactions in such accounts attract penal action.
Receipt or utilisation of foreign contribution by an NGO or association without valid FCRA registration, including where registration has expired, ceased, or been cancelled, is prohibited and liable to penal action; entities must verify registration status via the FCRA online portal and refrain from transactions in FCRA or utilisation accounts where the certificate is not valid.