Proposal for RBI Compounding Application

A compound is settling the matter by making monetary payments, in lieu of other liabilities. Hence, compounding is a mechanism that gives the offender an opportunity to avoid being prosecuted for the offense done by him after a minor pay off. To compound an offense with respect to the law means a settlement to avoid prosecution due to an offense, where else this is not an intrinsic right but given by the respective Act under which offense was committed.

Basic Concepts

1. As per Foreign Exchange Management Act, 1999 (FEMA), section 15 allows compounding of violation and gives power to the RBI to compound any breach as defined under Section 13 of FEMA, except breach under Section 3 (a) of FEMA, on an application done by a person who is violating.

2. Under Section 13, it is stated that if a person violates any FEMA provision or any notification, rule, direction or order issued as per powers are given by this Act, or violates any condition subject to which issued an authorization by the RBI, they would be liable to a penalty.

3. As the powers given by Section 46 and mentioned in sub-section (1) of Section 15 of FEMA, Central Government has made the Foreign Exchange Rules,2000 in connection to the compounding violations under chapter IV of FEMA.

Documents Required for RBI Application

Memorandum from RBI. The FIRC’s & FDI report filed with RBI Board and allotment filed with RBI & ROC Previous compounding offences if any Litigations

Method for RBI Compounding Application

Preparing compounding application and submitting to the regional office of the RBI

To get an order and penalize with RBI

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