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Compounding powers delegated to RBI Regional Office under FEMA Act 1999

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Compounding powers delegated to RBI Regional Office under FEMA Act 1999 and under  RBI Master direction of Compounding of Contraventions under FEMA, 1999

RBI/2020-21/67
A.P. (DIR Series) Circular No. 06

November 17, 2020

To

All Category-I Authorised Dealer Banks

Madam / Sir

Foreign Exchange Management Act, 1999 (FEMA)-
Compounding of Contraventions under FEMA, 1999

The attention of Authorized Dealer Category-I (AD Category-I) banks is invited to paragraph 3 of the Master Direction on “Compounding of Contraventions under FEMA, 1999”, in terms of which the powers to compound certain contraventions of Notifications FEMA 20/2000-RB dated May 3, 2000 and FEMA 20(R)/2017-RB dated November 07, 2017 have been delegated to the Regional Offices/Sub-Offices of the Reserve Bank for enhanced customer service and operational conveninece. The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 i.e. Notification No. FEMA.395/2019-RB, both notified on October 17, 2019, by Government of India and Reserve Bank of India respectively have since superseded the earlier Notification No. FEMA 20(R)/2017-RB. Accordingly, the compounding powers stand delegated to the Regional Offices/ Sub Offices of the Reserve Bank to compound the following contraventions.

FEM (Non –Debt Instruments) Rules, 2019 dated October 17, 2019
Rule 2(k) read with Rule 5
Rule 21
Paragraph 3 (b) of Schedule I (Issue of shares without approval of RBI or Government, wherever required)
Rule 4 (Receiving investment in India from non-resident or taking on record transfer of shares by Investee Company)
Rule 9(4) and Rule 13(3)

 

FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations dated October 17, 2019
Regulation 3.1(I)(A)
Regulation 4(1)
Regulation 4(2)
Regulation 4(3)
Regulation 4(6)
Regulation 4(7)
Regulation 4(11)

 

2- Please refer to para 3.5 of A.P. (DIR Series) Circular No. 56 dated June 28, 2010 and para 2 of A.P. (DIR Series) Circular No.11 dated July 31, 2012 with respect to the classification of a contravention under FEMA by the Reserve Bank as ‘technical’ or ‘material’ or ‘sensitive/serious in nature’. On a review it has been decided to discontinue the classification of a contravention as ‘technical’ that was dealt with by way of an administrative/ cautionary advice and regularize such contraventions by imposing minimal compounding amount as per the compounding matrix as contained in the ‘Master Direction – Compounding of Contraventions under FEMA, 1999’ dated January 01, 2016, as amended from time to time.

3- Please refer to para 3(I) of A.P. (DIR Series) Circular No.73 dated May 26, 2016 with respect to public disclosure of Compounding Orders. On a review and in partial modification of earlier instructions it has been decided that in respect of the Compounding Orders passed on or after March 01, 2020 a summary information, instead of the Compounding Orders, shall be published on the Bank’s website in the following format:

Sr. No. Name of the Applicant Details of contraventions (provisions of the Act/Regulation/Rules compounded) Date of compounding order Amount imposed for compounding of contraventions

 

4- The aforesaid Master Direction No. 4 dated January 01, 2016, as amended from time to time, is being updated to reflect the changes. AD Category – I banks should bring the contents of this circular to the notice of their constituents and customers concerned.

5- The directions contained in this circular have been issued under section 10(4) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Yours faithfully

Ajay Kumar Misra
Chief General Manager-in-Charge

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