Process of RBI Compounding Application

Foreign Exchange Management Act, 1999, and its rules are regarded as infringements if they are violated. In accordance with Section 13 of FEMA, 1999, compounding refers to admitting a violation and seeking redress. Furthermore, it applies to sections that cannot be compatible with the Reserve Bank. Despite this, serious offenses will not be compounded by the RBI. By admitting your mistake and incurring fewer transaction costs, you can mitigate violating.

Who Can Apply for Compounding?

There is the possibility of a person violating the provisions of FEMA, 1999, or any regulations that follow that act. A person may then apply for compounding with the Reserve Bank in that case. In the case of a compounding application for violations under section 3(a) of FEMA, 1999, the application should be submitted to the Directorate of Enforcement.

What Are the Details Required to Be Filled in the Application Form?

Compounding can be applied for by anyone except for those who violated Section 3(a) of the FEMA, 1999. Once they have been notified by the Reserve Bank of India or by a statutory authority, the applicant can make an application with ₹5000.

Compounding Application to RBI: Submit all required documents

There are certain steps that you have to follow in order to be qualified for this program, such as filling out the appropriate application and giving your contact information, details of an authorized representative, email address, mobile phone number, and any other documentation that may be required.

Documents required for compounding include

  • To provide the necessary information as per Annex II regarding all foreign direct investments, overseas direct investments, external commercial borrowings, and branch offices/liaison offices, please provide as much information as possible
  • The Memorandum of Association in certified form
  • In addition, you should submit the newly audited balance sheet, as well as proof that you are not under any type of investigation or inquiry from any jurisdiction or agency such as the Criminal Investigations Bureau
  • There may be a situation where such a situation arises after the application has been filed. If that occurs, you will need to inform RBI before the date when the compounding order will be issued.

All documents and details must be included in your application to avoid terminating the compounding process. After the compounding application has been completed and all the necessary details have been submitted, as well as a demand draft of $5000, it will be processed.

It is the directorate of investigation that is directly referred to investigate serious violations or contraventions such as terror financing, money laundering, or anything that compromises national sovereignty. A specified period of time must be given to the applicant for payment of the infringement.

There may be restrictions on how many compounding orders the applicant can collect. This is due to the fact that if the applicant commits any similar offense within three years of passing the compounding order, they are not allowed to receive a second one.

Process of Compounding

The takes RBI compounding application very seriously.

In order to ensure that you have completed all the steps correctly, you may be asked for additional information or records.

Compounding orders and punishment amounts are determined by the following factors:

  • A contravention that results in an unfair advantage
  • An authority’s loss due to a violation committed by them
  • Avoiding compliance and benefiting economically
  • Continuing to violate the law
  • Compounding application submitted by contravener

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