RBI Compounding of FEMA Violations: Process, Fees and Timeline
Compounding is the RBI's voluntary-disclosure mechanism for resolving FEMA (Foreign Exchange Management Act) contraventions — like a late FC-GPR filing or delayed FDI reporting — by paying a monetary penalty instead of facing prosecution. It is the standard route companies use once they discover they've missed a FEMA deadline.
Common contraventions that get compounded
- Late filing of FC-GPR (share allotment report) beyond the 30-day window
- Late filing of FC-TRS (share transfer report) beyond the 60-day window
- Delayed or missed annual FLA return
- Investment above the sector's FDI cap
- Pricing a share issue/transfer outside FEMA guidelines
How the compounding process works
- File an application on Form FEMA-CA with the RBI (regional office or Central Office depending on contravention value)
- Pay the processing fee of ₹5,000
- RBI reviews the application and may seek clarifications
- A compounding order is issued specifying the penalty amount
- Pay the penalty within 15 days of the order to close the matter
How the penalty is calculated
The penalty depends on the contravention amount, the duration of the delay, and whether it's a repeat contravention. Minor, prompt self-disclosures with short delays typically attract a modest, affordable penalty rather than the full 3x statutory maximum.
Timeline
Straightforward cases are typically resolved within 180 days of a complete application. Complex matters or those requiring government-route clearance can take longer.
Why disclose voluntarily instead of waiting
Compounding before the RBI or ED detects the issue independently usually results in a significantly lower penalty and no prosecution. Waiting to be caught removes this leniency.
If you've missed an FDI reporting deadline, our FEMA compliance team can assess exposure and file the compounding application.