Reserve bank of India is one of the main authorities in India. It has various powers and controls many important decisions not only financial matters but others also. The RBI compounding application can be applied when an individual or a company has committed any offense and wants to save him from the prosecution.

Foreign exchange management act, 1999(FEMA) empowered the RBI to permit the compounding for any act done against the act. It is basically a chance given to the individual to avoid any kind of legal proceedings against him for any criminal charge committed by him by paying money. It is solving legal matters by making a money payment. Payment is done by money also saves your other liabilities. The offender can be saved from this act.

Compounding is done to save the offender from the criminal charges upon him under the offense committed by him by the act. The basic idea of the compounding process for RBI is regularly modified and molded. This article provides the latest rules of compounding application for RBI.

In case of offending made by contravening sing made in terms of section 13(1), RBI has to be informed. An application to the officers of reserve bank of India must be authorized on the behalf of the central government of India. The amount involved in such contravention should be quantifiable.

The person to be approached in RBI depends on the amount of contravention. The further preceding can be stopped using the contravention right. In case you are not able to pay the amount of contravention on time, the penalty might get 3 times the earlier one and subsequently increases with each passing day.

Section IV of FEMA clearly defines the rules of compounding proceedings. They should be read carefully before submitting the compounding application.

The following documents are needed when you are applying for compounding application to RBI. The photocopy of these documents must also be preserved for future reference.

  • Memorandum gave by the RBI
  • Files of all previous compounding offenses if any
  • Approval of board resolution
  • FIRC report filed with RBI along with FDI report also.

Procedure for RBI compounding application –

  • write an application for compounding
  • attach the above-mentioned documents along with it
  • submit the compounding application to the office of RBI in your region
  • get the order
  • Pay the penalty to the person on a post in respect to the amount of money. As already mentioned different officers are meant with respect to your amount of payment.
  • Pay the penalty and make sure to pay it before time as a further penalty will be due if paid after the time limit.
Also note that if the amount is not paid on time, your compounding application will be canceled. Your case will be handed over to the directorate enforcement and this will be the worst situation for you. You might as well get accused of your crime.
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