1. Relevant Section- Section 15 of the FEMA 1999

2. Maximum time of application-Within 180 days from the date of contravention under section 13 of FEMA 1999

3. Adjudicating Authority-RBI

4. Section 13 of the FEMA-

General penalties under FEMA- if any person contravenes any provisions of FEMA, Rules, Regulations, Notifications, Direction or order issued  or contravenes any conditions subject to which any authorization is issued by the RBI, he shall upon adjudication, be liable to a penalty upto-

– 3 times of the sum involved in contravention where the amount is in number or

– Maximum Rs. 2,00,00  where the amount is not directly quantifiable and where the contravention is continue one

– Further penalty which may extend to Rs. 5000 for every day after the first day during which the contravention continues.

Compounding of Offence

5. Power to Compound to whom?-

Sum Involved Adjudicating Person
Upto 10 Lakh or below Assistant General Manager of RBI
More than 10,00,000 but less than 40,00,000 Deputy General Manager of RBI
More than 40 Lakh but less than 1 Crore General Manager of RBI
More than 1 Crore Chief General Manager of RBI

6. Offences in case of which power have delegated to Regional Offices-

1. Delay in FCIR

2. Delay in filling FC(GPR)

3. Delay in filling FLA

4. Delay in issue of securities or refund of shares application money beyond 60 days, mode of receipt of funds.

5. Contravention of pricing guidelines.

6. Issue of shares without approval of RBI

7. delay in filling of FC TRS

For more details refer:

https://taxguru.in/rbi/rbi-master-direction-compounding-contraventions-fema-1999.html

7. Application for Compounding- Application shall be made along with fees of Rs. 5000 by way of DD drawn in favor of RBI.

8. Annexure to application- The applicant may also furnish the details relating to-

a. FDI

b. ECB

c. ODI

d. Copy of MOA

e. Copy of latest audited financial statements

f. An undertaking that they are not subject to any litigation or in inquiry.

9. Case where application is not proper- In case applicant has not obtained the requisite approvals from the authority and the application is incomplete, then the application fees returned by crediting the same to applicant’s account  through NEFT.

10. Pre-requisite of Compounding process-

1. No application for the compounding of offence shall be accepted by the RBI , which is the similar contravention committed by him compounded within 3 years under FEMA, Any second or subsequent contravention committed after the expiry of a period of three years from the date on which the contravention was previously compounded shall be deemed to be a first contravention.

2. Where Contraventions relating to any transaction where proper approvals or permission from the Government or any statutory authority concerned, as the case may be, have not been obtained, such contraventions would not be compounded unless the required approvals are obtained from the concerned authorities.

3. Cases of contravention, such as, those having serious contravention suspected of money laundering, terror financing or affecting sovereignty and integrity of the nation or where the contravener fails to pay the sum for which contravention was compounded within the specified period in terms of the compounding order, shall be referred to the Directorate of Enforcement for further investigation and necessary action under FEMA, 1999 or to the authority instituted for implementation of the Prevention of Money Laundering Act 2002, or to any other agencies, for necessary action as deemed fit.

4. In case where the adjudicating authority is ED and an appeal has filed under section 17 or section 19 of FEMA 1999, no contravention can be compounded then the applicant shall confirm in the undertaking required to be furnished along with application.

Any other factors as may be prescribed

For more details refer:

https://taxguru.in/rbi/rbi-master-direction-compounding-contraventions-fema-1999.html

11. Procedure-

1. On receipt of application the RBI  shall properly review the application along with documents;

2. The Compounding authority may call for any further information explanations, Clarifications; if not provided the application can be liable to be rejected.

3. The following factors, which are only indicative, may be taken into consideration for the purpose of passing compounding order and adjudging the quantum of sum on payment of which contravention shall be compounded:

a) the amount of gain of unfair advantage, made as a result of the contravention;

b) the amount of  loss caused to any person  as a result of the contravention;

c) economic benefits accruing to the contravener from delayed compliance or compliance avoided;

d) the repetitive nature of the contravention, the track record and/or history of non-compliance of the contravener;

12. Issue of Compounding Order- Compounding Authority shall pass the compounding order within 180 days from the date of receipt of the Application.

13. Payment of Compounding fees-

The sum for which the contravention is compounded hall be paid by way of demand draft in favour of the “Reserve Bank of India” within 15 days from the date of the order of compounding of such contravention.

On realization of the sum for which contravention is compounded a certificate in this regard shall be issued by the Reserve Bank subject to the specified conditions, if any, in the order.

Tags:

Author Bio

More Under Fema / RBI

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031