Compounding of contraventions under FEMA sets fixed and variable penalty elements, subject to caps and mitigating factors. The Reserve Bank assesses compounding applications under the Compounding Rules, 2024, may call for additional information, and applies a guidance matrix combining fixed fees and variable charges based on amount under contravention or duration, with specific categories for reporting, submission delays, allotment/refund, guarantees and other non reporting contraventions. The payable amount is subject to a ceiling of three times the sum involved, interest based caps for small sums, multipliers for delayed allotment/refund scenarios, addition for undue gains, and possible enhancement where prior compounding amounts remain unpaid.