The Reserve Bank of India has amended its Master Directions on compounding of contraventions under the Foreign Exchange Management Act, 1999, by inserting a new clause that allows the compounding authority to cap the maximum compounding amount in specified cases. Subject to the compounding authority’s satisfaction and taking into account the nature of the contravention, exceptional circumstances or facts, and wider public interest, the maximum compounding amount may be capped at INR 200,000 for contravention of each regulation or rule covered in a compounding application where the contravention falls under row 5 of the computation matrix. The Master Directions will be updated to reflect this change, and Authorised Dealer Category-I banks and authorised banks have been asked to bring the updated guidelines to the notice of their constituents.
Reserve Bank of India 2025-04-24
Reserve Bank of India adds INR 200,000 cap on compounding amounts for certain FEMA contraventions
The Reserve Bank of India amended its Master Directions on compounding contraventions under the Foreign Exchange Management Act, 1999, capping the maximum compounding amount at INR 200,000 in specified cases. This cap applies to contraventions under row 5 of the computation matrix, subject to the compounding authority's satisfaction and consideration of exceptional circumstances and public interest. Authorised Dealer Category-I banks and authorised banks must inform their constituents of the updated guidelines.