**Summary:**
This circular, RBI/2016-17/220 A.P. DIR Series Circular No. 29, issued by the Reserve Bank of India (RBI) on February 2, 2017, amends the existing guidelines regarding the compounding of contraventions under the Foreign Exchange Management Act (FEMA), 1999. Specifically, it pertains to the delegation of powers to the Regional Offices of the RBI to compound contraventions related to delays in filing the Annual Return on Foreign Liabilities and Assets (FLA return) by Indian companies that have received Foreign Direct Investment.
The circular delegates powers to all Regional Offices, except Kochi and Panaji, to compound contraventions related to delays in filing the FLA return without any limit on the amount of contravention. The Kochi and Panaji Regional Offices are authorized to compound such contraventions only for amounts below Rupees One hundred lakh (Rs. 1,00,00,000). Contraventions of Rupees One hundred lakh (Rs. 1,00,00,000) or more under the jurisdiction of Kochi and Panaji will continue to be compounded at the Central Office.
Entities can submit applications for compounding FLA return filing delays to the respective Regional Offices, subject to the specified limits. Applications for all other contraventions should continue to be submitted to the Foreign Exchange Department, 5th floor, Amar Building, Sir P.M. Road, Fort, Mumbai 400001.
This circular takes immediate effect, and all other instructions on compounding remain unchanged. Authorised Dealer Category-I banks are instructed to bring the contents of this circular to the attention of their constituents and customers. The directions are issued under Sections 10(4) and 11(1) of FEMA, 1999.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and managing the country's monetary policy.
Foreign Exchange Management Act, 1999: An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Foreign Exchange Compounding Proceedings Rules, 2000: Rules established by the Government of India regarding the compounding of contraventions under FEMA, 1999.
Authorised Dealer Category I: Banks authorized by the Reserve Bank of India to deal in foreign exchange.
Mumbai, Maharashtra: The city where the Reserve Bank of India's central office and the Foreign Exchange Department are located.
Foreign Exchange Department: A department of the Reserve Bank of India responsible for managing foreign exchange regulations and related matters.
Kochi, Kerala: One of the Regional Offices of the Reserve Bank of India with specific limitations on compounding contraventions.
Panaji, Goa: One of the Regional Offices of the Reserve Bank of India with specific limitations on compounding contraventions.
RESERVE BANK OF INDIA
Mumbai - 400 001
RBI/2016-17/220
A.P. (DIR Series) Circular No. 29 February 02, 2017
To
All Category- I Authorised Dealer Banks
Madam / Sir,
Foreign Exchange Management Act, 1999 (FEMA)
Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) -
Compounding of Contraventions under FEMA, 1999
Attention of all the Authorised Dealer Category - I (AD Category - I) banks and
their constituents is invited to A.P. (DIR Series) Circular No. 117 and 36 dated
April 4, 2014 and October 16, 2014 respectively, and the Foreign Exchange
(Compounding Proceedings) Rules, 2000 notified by the Government of India
vide G.S.R.No.383 (E) dated 3rd May 2000, as amended from time to time,
regarding delegation of powers to the Regional Offices of the Reserve Bank of
India to compound the contraventions of FEMA.
2. In partial modification thereof, it has been decided to delegate further
powers to Regional Offices as under:
FEMA Regulation Brief Description of Contravention
Paragraph 9(2) of Schedule I Delay in filing the Annual Return on
to FEMA 20/2000-RB dated Foreign Liabilities and Assets (FLA return),
May 3, 2000 by all Indian companies which have
received Foreign Direct Investment in the
previous year(s) including the current year
3. The powers to compound the contraventions at Paragraph 2 above have
also been delegated to all Regional Offices (except Kochi and Panaji) without
any limit on the amount of contravention.4. Kochi and Panaji Regional offices can compound the above contraventions
for amount of contravention below Rupees One hundred lakh
(Rs.1,00,00,000/-) only. The contraventions of Rupees One hundred lakh
(Rs.1,00,00,000/) or more under the jurisdiction of Kochi and Panaji Regional
Offices will continue to be compounded at Central Office as hitherto.
5. Accordingly, applications for compounding the above contraventions as at
Paragraph 2, up to the amount of contravention stated in paragraph 3 and 4
may be submitted by the concerned entities to the respective Regional Offices
under whose jurisdiction they fall. For all other contraventions, applications
may continue to be submitted to Foreign Exchange Department, 5th floor,
Amar Building, Sir P.M.Road, Fort, Mumbai - 400001.
6. The above modifications will come into force with immediate effect. All
other instructions on compounding shall remain unchanged. This provision is
being clarified in Para 3 and 7.4 of the Master Direction on Compounding of
Contraventions under FEMA, 1999.
7. Authorised Dealers may bring the contents of this circular to the notice of
their constituents and customers concerned.
8. The directions contained in this circular have been issued under Sections
10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of
1999).
Yours faithfully,
(Shekhar Bhatnagar)
Chief General Manager-in-Charge