{"id":64019,"date":"2023-03-20T12:27:47","date_gmt":"2023-03-20T06:57:47","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=64019"},"modified":"2023-03-20T12:27:51","modified_gmt":"2023-03-20T06:57:51","slug":"compounding-of-contraventions-under-fema","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/compounding-of-contraventions-under-fema\/","title":{"rendered":"Compounding of Contraventions under FEMA"},"content":{"rendered":"

The Indian Parliament enacted the Foreign Exchange Management Act (FEMA) in 1999 and repealed the previous legislation of the Foreign Exchange Regulation<\/a> Act (FERA), 1973. FEMA consolidates the foreign exchange laws to promote external trade and orderly development of India’s foreign exchange market<\/a>. FEMA provides provisions for compounding of contraventions.
Compounding is the voluntary admission of contravention before the authorities. It includes admitting the intention and interpretation of the rules and regulations issued under the Act leading to the contravention. Section 15 of the FEMA authorizes the Reserve Bank of India (RBI) to compound the violation of section 13 of FEMA. Apart from section 3(a) contravention all contravention under section 13 of FEMA can be compounded. The provisions relating to the compounding of contravention are like a compromise to settle the matter. Under compounding provisions, a person accepts their inaccuracies and requests to compound their actions. Compounding will regularize and legalize the mistakes or inaccurate actions. It prevents legal actions to be taken against the person. Compounding will also simplify and expedite the process. Compounding of contravention is done by an authorized officer of RBI within 180 days from the date of receipt of application to compound. Further, only the quantifiable violation can be compounded.<\/p>\n\n\n\n

RBI’s Power to Compound<\/h2>\n\n\n\n

The following officers under the direction and control of the Governor of RBI, are responsible for compounding any violation of the provisions of FEMA:<\/p>\n\n\n\n

Compounding Authority<\/strong><\/td>Amount<\/strong><\/td><\/tr>
Assistant General Manager of RBI<\/td>Upto Rs. 10 Lakh<\/td><\/tr>
Deputy General Manager of RBI<\/td>> Rs. 10 lakh but < Rs. 40 lakh<\/td><\/tr>
General Manager of RBI<\/td>> Rs. 40 lakh but < Rs. 1 crore<\/td><\/tr>
Chief General Manager of RBI<\/td>> Rs. 1 crore<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Delegation of Power to Regional and Central Office<\/h2>\n\n\n\n

To reduce operational issues and improve customer service, the RBI has split the power to compound between the regional and central offices.<\/p>\n\n\n\n

The following contraventions are delegated to the Central office in New Delhi:<\/p>\n\n\n\n