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Compounding of FEMA violations decentralised

14th December, 2011

The Reserve Bank of India has, on 13th December, 2011, delegated its powers of compounding of FEMA contraventions, to its Regional offices/branches.  RBI’s Circular No. 57, cites customer service and operational convenience as reasons for such delegation.
As per the latest amendments, for delay in reporting of inward remittance and for delay in filing of form FC-GPR after allotment of shares, regional authorities in Bhopal, Bhubaneshwar, Chandigarh, Guwahati, Jaipur, Jammu, Kanpur, Kochi, Patna and Panaji can  compound the contraventions involving amount up to Rs. One Crore. The regional authorities in Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi have been empowered to compound the specified contraventions without any monetary limit. These authorities will also have power to deal with delay in issuance of shares beyond 180 days. For all other contraventions, applications are to be submitted to the Compounding Authority in Mumbai, as earlier.
The latest directions issued by the RBI, clarify that prescribed fee of Rs. 5000/- is payable along with the application to the regional authority or the office at Mumbai. The applicants will also be required to furnish the details relating to FDI, External Commercial Borrowings, Overseas Direct Investment and Branch/Liaison office. Applicants should also furnish copy of Memorandum of Association, latest audited balance sheet and an undertaking that they are not under investigation by any agency like DOE or CBI.
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