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Compounding of Contraventions under FEMA, 1999
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....on 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. Yours faithfully, (Dr. Aditya Gaiha) Chief General Manager in Charge Guidelines for compounding of contraventions under FEMA, 1999 INDEX Description 1. Ge....
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....e transactions to reduce compliance burden as well as costs wherever violation of the Act or the Rules and Regulations issued under the Act are involved. However, compounding of contraventions of cases falling under Rule 4(2) and Rule 9 of the Compounding Rules, 2024 shall not be compounded. 2. Compounding of the contraventions by the Reserve Bank 2.1 In order to facilitate operational convenience, contraventions of following Rules and/or Regulations issued under the Act shall be compounded by the compounding authorities of the Reserve Bank at the Regional Offices. Regulations under Notification No. FEMA 20/2000-RB dated May 3, 2000 Regulations under Notification No. FEMA 20(R)/ 2017-RB dated November 07, 2017 Rules under FEM (Non-Debt Instruments) Rules, 2019 dated October 17, 2019 Regulations under Notification No. FEMA 395/2019-RB dated October 17, 2019 Paragraph 9(1)(A) of Schedule 1 Regulation 13.1(1) Rule 2(k) read with Rule 5 Regulation 3.1(I)(A) Paragraph 9(1)(B) of Schedule 1 Regulation 13.1(2) Rule 21 Regulation 4(1) Paragraph 9(2) of Schedule 1 Regulation 13.1(3) Paragraph 3 (b) of Schedule I (Issue....
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....to any of the above contraventions shall be submitted by the applicants to the respective Regional Offices under whose jurisdiction they fall or to FED, CO Cell, New Delhi, as applicable. With respect to jurisdiction to be exercised by Regional Offices, any compounding application related to foreign investment-related contraventions (as mentioned hereinabove) is to be submitted to the Regional Office having jurisdiction over the registered office of the investee Indian company concerned. 2.4 For all other contraventions, applications may be submitted to the Cell for Effective implementation of FEMA (CEFA), Foreign Exchange Department, Reserve Bank of India, 11th floor, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai - 400001. 3. Application for Compounding 3.1 An applicant may submit a compounding application, along with the relevant documents, physically or through PRAVAAH Portal of the Reserve Bank, either suo moto or based on a Memorandum of Contraventions issued by the Reserve Bank. Where an applicant, after issue of the Memorandum of contraventions issued by the Reserve Bank, does not opt for compounding within the....
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....plicant to the notice of the compounding authority, during the pendency of the compounding application with the Reserve Bank. 3.7 In case of an incomplete application, wherever the applicant is allowed by the Reserve Bank to submit any necessary information or documents within a reasonable time, then the date of receipt of such information or documents, as the case may be, shall be taken as the date of receipt of the application. 4. Certain cases not eligible for compounding 4.1 In respect of a contravention committed by any person (applicant) within a period of three years from the date on which a similar contravention was committed and the same was compounded, such contraventions shall not be compounded, and the relevant provisions of the Act shall apply. Any contravention committed after the expiry of a period of three years from the date on which a similar contravention was previously compounded shall be deemed to be a first contravention. 4.2 No compounding application shall be processed unless the requisite administrative action is completed by the applicant. Explanation: Administrative action shall mean such action as may be ....
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....ious in nature and, therefore, need to be referred to the DoE for adjudication or further investigation. 5. Procedure for compounding 5.1 On receipt of an application, the Reserve Bank shall examine the application based on the documents and submissions made in the application and assess whether contravention can be compounded in accordance with the Compounding Rules, 2024 and, if so, the sum involved in the contravention. 5.2 The Compounding Authority may call for any information, or any other documents relevant to the compounding proceedings. In case the contravener fails to submit the additional information/documents called for within the specified period, the application for compounding shall be liable to be returned. 5.3 The following factors, which are only indicative, shall be taken into consideration for the purpose of passing compounding order and determining amount on payment of which contravention shall be compounded: • Undue gains i.e., the amount of gain of unfair advantage, wherever quantifiable, made as a result of the contravention (or) economic benefits accruing to the contravener from delayed compliance or complianc....
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....¢ FCGPR (B) or FLA Returns - FEMA 20 / FEMA 20 (R) / FEMA 120/ FEMA 395/ FEMA 400 INR 10,000 per AAC/ APR/ FCGPR (B) / FLA Return delayed. Delayed/Non receipt of share certificate - INR.10000/- per year, the total amount being subject to ceiling of 300% of the amount invested. 3] A] Allotment/ Refunds Non-allotment of shares or allotment/ refund after the stipulated period for Foreign Investment B] Contraventions (Other than the reporting contraventions mentioned in Para 1(v) above) by LO/ BO/ PO Fixed Amount: INR 30,000/- (applied once for each regulation/ rule contravened, in a compounding application) plus Variable amount: Period of delay/ non submission, as applicable Variable amount that may be imposed as percentage of "amount under contravention" Less than 1 year 0.30% 1 year and above but less than 2 years 0.35% 2 years and above but less than 3 years 0.40% 3 years and above but less than 4 years 0.45% 4 years and above but less than 5 years 0.50% 5 years or more 0.75% (For project offices the amount of contravention shall be deemed to be 10% of the cost of project)....
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....lculated as per table above (subject to provisos at (i) & (ii) above). • If the shares are not allotted and the amount is refunded after 180 days without the Bank's permission: 1.75 times the amount calculated as per table above (subject to provisos at (i) & (ii) above). iv. In cases where it is established that the contravener has made undue gains, the amount thereof may be neutralized to a reasonable extent by adding the same to the compounding amount calculated as per matrix above. v. If an applicant against whom a compounding order had been passed earlier and applicant didn't pay the compounding amount as mentioned in such order and reapplies for compounding of contravention relating to the same transaction, the amount calculated as above may be enhanced by 50% of earlier compounding amount subject to sub-para (i) above. III. For calculating compounding amount in respect of reporting contraventions under para I.1 of above matrix, the period of contravention may be considered proportionately {(approx. rounded off to next higher month / 12) X amount for 1 year}. The total no. of days does not exclude Sundays/holidays. 6. Issue of t....
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...., or such other permissible electronic or online modes of payment within 15 days from the date of the order of compounding of such contravention. The manner in which the demand draft has to be drawn and deposited/ details of bank account for transferring through electronic mode of payment shall be indicated in the compounding order. It may be ensured that intimation of payment of amount for which contravention is compounded shall be made as soon as possible, but not later than 2 hours from time of payment in the template provided in Para B of Annexure I. 7.2 The provisions of Compounding Rules, 2024, do not confer any right to the contravener, after a compounding order is passed, to seek to withdraw the order or to hold that the compounding order is void or request review of the order passed by the Compounding Authority. 7.3 In case of failure to pay the sum compounded within the time specified in the compounding order and Compounding Rules, 2024, it shall be deemed that the contravener had never made an application for compounding of any contravention under these Rules. 7.4 In respect of the contraventions of the FEMA, 1999 which are not compounded ....
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.... RBISOJMPA01 [email protected] 186003001 RBISOKNPA01 [email protected] 186003001 RBISOKCPA01 [email protected] 186003001 RBISOKLPA01 [email protected] 4802413301 RBIS0MBPA04 [email protected] 186003001 RBISONDPA01 [email protected] 186003001 RBISOPJPA01 [email protected] 186003001 RBISOPTPA01 [email protected] 15 Annexure I B. Mail to be sent (as soon as possible but not later than 2 hours from the time of payment) to RBI Regional Office / Central office/ CO Cell, New Delhi post making payment of compounding application fee/ compounding amount*. (A copy of the mail sent to RBI office may also be included along with the application form). SUBJECT: .(Please provide name of the applicant) - Details of payment made for compounding application fee / compounding amount * through electronic or online mode of payment Sir/Madam, In reference to captioned subject, it is brought to your notice that compounding application fee/ compounding amount has been paid by transaction are as below. a. b. Compounding application reference no.#: .(name of the applicant). Details of the Mode of payment [NE....
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....Kanpur- 208001. Tel: 0512-2305949 Reserve Bank of India Banerji Road, Ernakulam North, Post Box No. 3065, Kochi - 682018. Tel: 0484-2402911/2400985 Reserve Bank of India 15, NS Road, Kolkata - 700001 Tel: 033-22303299 Reserve Bank of India, Mumbai Regional Office, Shahid Bhagat Singh Road, Kala Ghoda, Fort, Mumbai, Maharashtra 400001, India Tel: 022-22704715 Reserve Bank of India 6, Sansad Marg, New Delhi - 110001. 18 Tel: 011-23325225 Reserve Bank of India 7th Floor, Gera's Imperium-II Patto, Panaji - 403001, Tel: 0832-2467888 Reserve Bank of India South Gandhi Maidan, Patna 800001, India. Tel: 0612-2323291/2323109 Document 2 Annexure II Foreign Direct Investment (FDI) Details to be furnished along with application for compounding of contravention relating to Foreign Direct Investment in India • • • Name of the applicant Date of incorporation Income-tax PAN Nature of activities under taken (Please give NIC code – 1987/2008) Brief particulars about the foreign investor Details of foreign inward remittances received by Applicant Company from date ....
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....ls of ECB 2 returns submitted; Period of return: Date of submission • Details of Utilization of ECB in Foreign Currency and Indian Rupee 20 • Nature of contravention and reasons for the contravention All supporting documents may be submitted Annexure II Overseas Direct Investment (ODI) Details to be furnished along with application for compounding of contravention relating to Overseas Investment • Name of the applicant • Date of incorporation • • Income-tax PAN Nature of activities under taken (Please give NIC code – 1987) Name of Overseas entity • Date of incorporation of overseas entity • • • Nature of activities under taken by overseas entity Nature of entity- WOS/JV Details of remittance sent- Date of remittance; Amount in FCY and in INR • Details of other financial Commitment • Details of UIN applied and received • Date of receipt of share certificate • • • • Approval of other regulators if required Details of APRs submitted: For the period ended; date of....