NEW RBI CIRCULAR ON COMPOUNDING OF CONTRAVENTIONS UNDER FEMA,1999

NEW RBI CICULAR FOR COMPOUNDING OF CONTRAVENTIONS UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999(FEMA):

The Reserve Bank (RBI) of India vide its A.P. (DIR series) Circular no. 56 dated 28.06.2010 has prescribed a new procedure for Compounding of Contravention/s under Foreign Exchange Management Act, 1999 (FEMA), by superseding the circular A.P. (DIR series) Circular no. 31 issued on 01.02.2005, with the aim to streamline the process and procedure for compounding and to ensure or better transparency and effective implementation of the compounding procedure under FEMA.

Reserve Bank of India in line with section 15 of FEMA compound contraventions w.r.t. section 13 of FEMA, which defines Penalties to be imposed on any person, who contravenes any provision of this Act, Rule, Regulation, Notification, Direction or Order issued or contravenes any Condition issued by Reserve Bank, up to thrice the sum involved in such contravention where such amount is quantifiab le or up to two lakh rupees wher the amount is not quantifiable and where such contravention is continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. The said enactment excludes to compound the contravention of section 3 (a) of FEMA, on any person who deal in or transfer any foreign exchange or foreign security to any person not being an Authorized Dealer. Further Contraventions which are willful, intentional or having malafide and fraudulent intentions shall not be considered for compounding in terms of the Foreign Exchange (compounding Proceedings) Rules, 2000.