What changed
Paragraph 5.4.II.v of the October 2024 circular, which linked the compounding amount for repeat contraventions to the earlier compounding order, has been deleted. Now, repeat applicants are treated as fresh applicants with no linkage to past orders. Additionally, Part B of Annexure I now requires the applicant's mobile number, the specific RBI office where payment was made, and the mode of application submission (PRAVAAH or physical).
What it means for you
Banks and their customers will no longer face reduced compounding amounts for repeat FEMA violations, as each application is treated independently. The new data requirements aim to reduce reconciliation delays and speed up processing, but applicants must ensure correct payment routing and timely submission to avoid bottlenecks.
What you must do
- Update internal FEMA compounding guidelines to reflect deletion of paragraph 5.4.II.v and the new data requirements.
- Advise customers to provide mobile number, correct RBI office, and submission mode when applying for compounding.
- Ensure customers make payment to the correct RBI office and submit the application promptly to avoid delays.
- Train staff on the revised process to assist customers with accurate application submissions.
Who it affects
All Authorised Dealer Category-I banks, Authorised banks, Customers applying for compounding of FEMA contraventions
What happens if a customer has a previous compounding order?
The earlier rule linking the new compounding amount to the previous order is deleted. The customer is treated as a fresh applicant, and the compounding amount is calculated independently.
What additional details are now required in the compounding application?
Applicants must provide their mobile number, the specific RBI office where payment was made, and the mode of submission (PRAVAAH or physical) to help reconcile payments faster.
Why did RBI make these changes?
To address delays caused by incorrect payment routing and late application submissions, improving turnaround time for processing compounding applications.