RBI has delegated authority to compound certain contraventions under FEMA, 1999, to its regional offices via circular dated October 23, 2026. The move aims to expedite resolution of minor violations and reduce backlog.
RBI Delegates FEMA Compounding Powers
The Reserve Bank of India, via A.P. (DIR Series) Circular No. 28/2026-27 dated October 23, 2026, delegated powers to compound certain contraventions under the Foreign Exchange Management Act, 1999, to its regional offices. This initiative aims to streamline dispute resolution for minor procedural violations and reduce processing time.
The delegation applies to contraventions involving delays in filing reports (e.g., ECB-2, FCAR), minor deviations in export realization, and technical defaults not involving monetary gains. The regional offices can now approve compounding applications up to INR 50 lakh, while higher-value cases remain with the central office. The move builds on the framework introduced in Circular No. 17/2024-25 dated October 1, 2024.
"The delegated authority shall ensure timely disposal of compounding applications within 90 days of submission,"RBI stated. Practitioners must now route appropriate cases to regional offices, ensuring complete documentation to avoid delays. This decentralisation reflects RBI’s broader trend toward efficient enforcement and facilitative regulation.
Citations
- Foreign Exchange Management Act, 1999
