SAFEMA Reduces Penalty for Trust’s FEMA Loan Breach

FEMA Loan Rule Breach: SAFEMA Reduces Penalty

The SAFEMA Tribunal has reduced the penalty imposed on an educational trust for contravening FEMA regulations concerning borrowing from non-residents without prior RBI approval.

The Trust had received loans exceeding the permitted ceiling under the automatic route. While the contravention was admitted, the Tribunal noted absence of profit motive, no misuse of funds, and prompt cooperation with the investigation. It also considered the charitable nature of the institution.

The reduced penalty reflects proportionality in enforcement. Practitioners should highlight institutional character, remedial conduct, and lack of financial gain when representing non-profit entities in compounding or adjudication proceedings.