What changed
RBI delegated compounding authority for specific FEMA contraventions (delays in reporting inward remittances, FC-GPR filing, and share issuance beyond 180 days) to its Regional Offices. For smaller contravention amounts (below Rs. 1 crore), ten Regional Offices (Bhopal, Bhubaneshwar, Chandigarh, Guwahati, Jaipur, Jammu, Kanpur, Kochi, Patna, Panaji) can now handle cases. For larger amounts, seven major offices (Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi) have unlimited authority. Additionally, applicants must now submit standardized documentation (Annexes for FDI, ECB, ODI, Branch/Liaison Office, plus an undertaking of no investigation, MOA, and latest audited balance sheet) to avoid correspondence delays.
What it means for you
Banks and their customers can now approach local RBI Regional Offices for compounding of common FEMA procedural delays, reducing the need to route all cases through Mumbai. This decentralization speeds up resolution for smaller contraventions. The standardized documentation requirement will streamline processing but demands careful preparation by applicants. AD banks must update their internal procedures and advise clients accordingly.
What you must do
- Inform all constituents about the new delegation of compounding powers to RBI Regional Offices for specified FEMA contraventions.
- Guide customers to submit compounding applications directly to the relevant Regional Office with the prescribed fee (Rs. 5,000 demand draft) and required documents (Annexes, undertaking, MOA, audited balance sheet).
- Ensure customers understand the documentation requirements to avoid delays; advise them to check jurisdiction and contravention amount limits.
- Update internal compliance manuals and training materials to reflect the decentralized compounding process.
Who it affects
All Category-I Authorised Dealer banks, Companies and entities with FEMA contraventions related to FDI, ECB, ODI, or Branch/Liaison Office reporting delays, RBI Regional Offices (Foreign Exchange Department)
Which FEMA contraventions can now be compounded at RBI Regional Offices?
The circular covers delays in reporting inward remittances, delays in filing form FC-GPR after share allotment, and delays in issuing shares beyond 180 days, as per specific paragraphs of Schedule I to FEMA 20/2000-RB.
What is the fee and where should it be submitted?
The fee is Rs. 5,000, payable via demand draft in favor of 'Reserve Bank of India' and payable at the Regional Office where the application is submitted (or at Mumbai if submitted to CEFA).
What documents must accompany the compounding application?
Applicants must provide details as per the prescribed Annexes (for FDI, ECB, ODI, Branch/Liaison Office), an undertaking that they are not under investigation by agencies like DOE or CBI, a copy of the Memorandum of Association, and the latest audited balance sheet.