Govt Notifies New FEMA Compounding Rules, Shares Disposal Data

Government Details FEMA Compounding Rules, RBI Directions and Disposal of Applications

In reply to Lok Sabha Unstarred Question No. 1353 answered on 27.07.2026, the Ministry of Finance stated that the Government notified the Foreign Exchange (Compounding Procedures) Rules, 2024 on 12.09.2024, replacing the Foreign Exchange (Compounding Procedures) Rules, 2000. It further stated that the Reserve Bank of India (RBI) issued the Master Directions – Compounding of Contraventions under FEMA, 1999 dated 22.04.2025, as updated from time to time, consolidating operational instructions for filing compounding applications. The Ministry provided year-wise data on applications disposed of, amounts imposed and amounts received from April 2021 to 20 July 2026. It stated that No Objection Certificates (NOCs) from the Directorate of Enforcement were obtained in 79 disposed applications, with year-wise figures provided, while sector-wise data is not maintained. The Ministry further stated that the criteria and safeguards for compounding applications are provided in the Foreign Exchange (Compounding Procedures) Rules, 2024, and that no information is available regarding the impact of the revised compounding mechanism on reducing litigation, improving compliance or ensuring timely disposal of FEMA cases.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE

LOK SABHA
UN-STARRED QUESTION NO. 1353
TO BE ANSWERED ON MONDAY, JULY 27, 2026/ SHRAVANA 5, 1948 (SAKA)
Compounding Offences under FEMA

1353. Shri Azad Kirti Jha:

Will the Minister of FINANCE be pleased to state:

a. whether the Government has revised or streamlined the process for compounding offences under the Foreign Exchange Management Act (FEMA) in coordination with the Reserve Bank of India, if so, the details thereof;

b. the number of FEMA cases disposed of through compounding during the last five years and the current year, year-wise, along with the total amount of penalties imposed and recovered during the said period;

c. whether the Enforcement Directorate has issued No Objection Certificates (NOCs) in such cases, if so, the number of such cases in which NOCs have been issued, sector-wise and year-wise;

d. the criteria and safeguards adopted by the Government to determine eligibility for compounding, including cases involving large-value violations; and

e. whether the Government has assessed the impact of the revised compounding mechanism on reducing litigation, improving compliance and ensuring timely disposal of FEMA cases and if so, the details thereof?

ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI PANKAJ CHAUDHARY)

a. Government has notified the Foreign Exchange (Compounding Procedures) Rules, 2024 on 12th September, 2024 which has replaced the Foreign Exchange (Compounding Procedures) Rules, 2000. Further, RBI has issued Master Directions – Compounding of Contraventions under FEMA, 1999, dated April 22, 2025 as updated from time to time listing out the consolidated operational instructions on filing of compounding applications with RBI.

b. and (c) The details of year-wise data on compounding applications disposed along with the amount imposed and received is as per Annexure. Of the applications disposed, No Objection Certificates (NoCs) were obtained from the Directorate of

Enforcement in 79 cases. Sector wise data is not maintained. The year-wise breakup of cases is as follows:

d. The criteria and safeguards for compounding the application in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2024 are categorically provided in the Rules.

e. No such information is available.

*****

Annexure

Year-Wise data on compounding applications disposed along with the amount imposed and received

( Amount in rupees)