Foreign Exchange (Compounding Proceedings) Rules, 2024 notified. Monetary limit enhanced for jurisdiction of officials of RBI/ED
Ministry of Finance has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024. The said rules replaces 2000 Rules and have become effective from 12.09.2024
As per the 2024 rules, Director of Enforcement and an officer of the Reserve Bank of India shall be the authority for compounding the contravention of FEMA provisions. Reserve Bank have been authorised to compound various contraventions except dealing in or transfer any foreign exchange or foreign security to any person not being an authorised person. For contravention in dealing in or transfer any foreign exchange or foreign security to any person not being an authorised person, power of compounding lies with Directorate of Enforcement.
The power of officials of RBI and ED to compound
An offence shall be compounded by RBI/ED based on the monetary limits of the contravention as under:
Power of RBI Officials
| Sum involved in contravention | Rank of RBI Officer |
| Where sum involved does not exceed sixty lakh rupees (earlier Rs. 10 lakhs) | Assistant General Manager or above |
| Where sum involved does not exceed two and a half crore rupees (earlier less than 40 laks) | Deputy General Manager or above |
| Where sum involved does not exceed five crore rupees (earlier Rs. one crore) | General Manager or above |
| Where sum involved exceed five crore rupees (earlier Rs. one crores) | Chief General Manager or above |
Power of officials of ED:
| Sum involved in contravention | Rank of ED Officer |
| Where sum involved does not exceed five lakh rupees (earlier less than rupees ten lakh: Additional Director) | Deputy Director or below |
| Where the sum involved in such contravention is more than five lakh rupees but less than ten lakh rupees (earlier less than fifty lakhs) | Special Director |
| where the sum involved in the contravention is fifty lakh rupees or more but less than one crore rupees (earlier less than one crore rupee: Special Director with Deputy Legal Adviser) | Deputy Legal Adviser |
| where the sum involved in such contravention is one crore rupees or more | Special Director |
However, the following contraventions shall not be compounded
(a) where the amount involved is not quantifiable; or
(b) where the provisions of section 37A of the Foreign Exchange Management Act, 1999 (the Act) are applicable; or
(c) where the Directorate of Enforcement is of the view that the proceeding relates to a serious contravention suspected of money-laundering, terror financing or affecting the sovereignty and integrity of the nation, the compounding authority shall not proceed with the matter and shall remit the case to the appropriate Adjudicating Authority for adjudicating contravention under section 13; or
(d) where the Adjudicating Authority has already passed an order imposing penalty under section 13 of the Act; or
(e) where the compounding authority is of the view that the contravention involved requires further investigation by the Directorate of Enforcement to ascertain the amount of contravention under section 13 of the Act.
Procedure for compounding. – An application in the prescribed Form shall be made to the compounding authority who may call for any information, record or any other documents relevant to the compounding proceeding and after affording an opportunity of being heard to the applicant, shall pass the compounding order not later than one hundred and eighty days from the date of receipt of such application.
Consequences of failure in paying sum compounded. – In case a person fails to pay the sum compounded within the time specified in that rule, he shall be deemed to have never made an application for compounding of any contravention under these rules, and the provisions of the Act for contravention shall apply to him.
Any existing compounding application pending before the compounding authority, on the date of commencement of these rules, shall continue to be governed by the provisions of the Foreign Exchange (Compounding Proceedings) Rules, 2000.
Foreign Exchange (Compounding Proceedings) Rules, 2024 >>
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