TMI BlogForeign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 , effective from June 1, 2000, Reserve Bank is empowered to compound contraventions relating to rule 7 , 8 and 9 of and the third schedule to the Foreign Exchange Management (Current Account Transactions) (FEMCAT) Rules, 2000 . With a view to providing comfort to individuals and corporate community by minimizing transaction costs and the same time taking a serious view of wilful, malafide and fraudulent transactions, the Reserve Bank was, vide GSR 609 (E) dated September 13, 2004 empowered to compound all the contraventions of Foreign Exchange Management Act, 1999 (FEMA) except section 3(a) of FEMA . 3. To ensure more transparency and greater disclosure, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This new provision is being inserted as sub-para 7.4 in the Master Direction on Compounding and the subsequent sub-paragraph renumbered accordingly. 4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under section 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Yours faithfully, (Shekhar Bhatnagar) Chief General Manager-in-Charge Annex Guidance Note on computation of the amount imposed under the Foreign Exchange (Compounding Proceedings) Rules 2000 Ref : A.P. (DIR Series) Circular No. dated May 26, 2016 I. Computation Matrix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 300% of the amount invested. 3] A] Allotment/Refunds Para 8 of FEMA 20/2000-RB (non-allotment of shares or allotment/ refund after the stipulated 180 days) B] LO/BO/PO (Other than reporting contraventions) Rs.30000/- + given percentage: 1st year : 0.30% 1-2 years : 0.35% 2-3 years : 0.40% 3-4 years : 0.45% 4-5 years : 0.50% 5 years : 0.75% (For project offices the amount of contravention shall be deemed to be 10% of the cost of project). 4] All other contraventions except Corporate Guarantees Rs.50000/- + given percentage: 1st year : 0.50% 1-2 years : 0.55% 2-3 years : 0.60% 3-4 years : 0.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permission: 1.50 times the amount calculated as per table above (subject to provisos at (i) (ii) above). c. If the shares are not allotted and the amount is refunded after 180 days without the Bank s permission: 1.75 times the amount calculated as per table above (subject to provisos at (i) (ii) above). (iv) In cases where it is established that the contravenor has made undue gains, the amount thereof may be neutralized to a reasonable extent by adding the same to the compounding amount calculated as per chart. (v) If a party who has been compounded earlier applies for compounding again for similar contravention, the amount calculated as above may be enhanced by 50%. III. For calculating amount in respect of reporting contra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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