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ARTICLE · 07 NOVEMBER 2014

Compounding Of Contraventions Of Exchange Control Laws

Nishith Desai Associates
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The Reserve Bank of India, India’s central bank has granted additional compounding powers under the Foreign Exchange Management Act, 1999, to its regional offices across the country.

IndiaFinance and Banking
Rahul Rishi
Rahul Rishi
Aditya Shukla
Aditya Shukla
Kishore Joshi
Kishore Joshi
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  • RBI delegates additional compounding authority to its regional offices
  • Decentralization intended to bring efficiency to the compounding process and may reduce transaction costs for the applicants
  • An urgent need to simplify procedural and filing requirements to ease compounding

The Reserve Bank of India ("RBI"), India's central bank has granted additional compounding powers under the Foreign Exchange Management Act, 1999 ("FEMA"), to its regional offices across the country. Further, RBI has also re-aligned the jurisdiction of regional offices in respect of certain contraventions. This is part of the recent trend towards delegating compounding powers to regional offices which was, hitherto, concentrated with RBI's central office in Mumbai. This should be a welcome move as it may lead to an efficient and effective resolution of compounding proceedings.

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