RBI notifies amendments to Directions – Compounding of Contraventions under FEMA, 1999

The Reserve Bank of India (RBI) has, vide notifications dated April 22, 2025 and April 24, 2025 (collectively, Compounding Notifications), notified certain amendments to: (i) the guidelines for compounding of contraventions under FEMA, 1999 issued vide circular dated October 01, 2024 (Compounding Directions); and (ii) Master Directions on compounding of contraventions under FEMA, 1999 dated April 22, 2025 (Master Directions).

The key amendments notified by the RBI include inter alia the following:

• No Linkage of Compounding Amount from Previous Orders:

Paragraph 5.4.II.v of the Compounding Directions has been omitted, which provided that, in the event an applicant fails to pay the compounding amount from a compounding order passed earlier and reapplies for compounding of the same contravention, the new compounding amount may be increased by 50% (fifty percent) of the earlier amount, subject to applicable conditions. Pursuant to the amendment to the Compounding Directions, now in such cases, the applicant shall be deemed to have made a fresh application, and the compounding amount payable shall not be linked to the earlier compounding order.

• Inclusion of Additional Details for Email Confirmations Required for E-Payment Tracking

In relation to the instructions laid down in Part B of Annexure I to Compounding Directions on the payment of application fee / compounding amount through electronic mode, the following additional details will be included in Part B of Annexure I of the Compounding Directions, in order to resolve issues in reconciling received amounts and delays in processing compounding applications caused by applicants making payments to the incorrect RBI office and / or delay in processing compounding applications caused by applicants making payments to the incorrect RBI office or delaying submission of the compounding application after making the application fee payment: (i) Mobile number of the applicant/ authorised representative; (ii) Office of the Reserve Bank (i.e., Central Office, Regional Office or FED CO Cell) to which the payment was made; and (iii) Mode of submission of application (through PRAVAAH/ physical).

For more details, kindly refer to the Compounding Notifications available by clicking on these links – link (notification dated April 22, 2025) and link (notification dated April 24, 2025).