RBI amends rules on compounding of FEMA contraventions for faster disposal
This story was originally published at 20:45 IST on 22 April 2025
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NEW DELHI – The Reserve Bank of India on Tuesday made two amendments to its directions on compounding of contraventions under the Foreign Exchange Management Act aimed at disposing of applications quicker.
Under the earlier norms, if an applicant had not paid the compounding amount mentioned in a compounding order, he had to pay an additional 50% for reapplying for compounding the contravention in the same transaction. The RBI on Tuesday said it would treat each application as a fresh one, and the compounding amount payable would not be linked to the previous amount.
According to the RBI, contravention is a breach of the provisions of the Foreign Exchange Management Act, 1999, and compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal.
Secondly, the applicant had to send an email to a specified RBI office to reconcile the application and the fee while making a payment through the electronic mode. This had led to errors as to what offices the payments were going to, the notification said.
To address these challenges and improve turnaround time for processing compounding applications, it has been decided to seek additional details in the email, including the mobile number of the applicant and the office of the central bank to which the payment was made and the mode of submission of the application, the RBI said. End
Reported by Aaryan Khanna
Edited by Saji George Titus
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