Reserve Bank Of India
A.P. (DIR Series) Circular No.11
July 31, 2012
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Foreign Exchange Management Act, 1999 (FEMA)-
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. 56 dated June
28, 2010 and the subsequent Press Release dated August 13, 2010, clarifying the
position on ‘technical’ contravention and subsequent compounding thereof.
- In this connection, it is clarified that whenever a contravention is
identified by the Reserve Bank or brought to its notice by the entity involved
in contravention by way of a reference other than through the prescribed
application for compounding, the Bank will continue to decide (i) whether a
contravention is technical and/or minor in nature and, as such, can be dealt
with by way of an administrative/ cautionary advice; (ii) whether it is material
and, hence, is required to be compounded for which the necessary compounding
procedure has to be followed or (iii) whether the issues involved are sensitive
/ serious in nature and, therefore, need to be referred to the Directorate of
Enforcement (DOE). However, once a compounding application is filed by the
concerned entity suo moto, admitting the contravention, the same will not be
considered as ‘technical’ or ‘minor’ in nature and the compounding process shall
be initiated in terms of section 15 (1) of Foreign Exchange Management Act, 1999
read with Rule 9 of Foreign Exchange (Compounding Proceedings) Rules, 2000.
- Authorised Dealers may bring the contents of this circular to the notice of
their constituents and customers concerned.
- 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,
(Dr. Sujatha Elizabeth Prasad)
Chief General Manager-in-Charge
RBI/2012-13/153