RBI ISSUED COMPOUNDING ORDER FOR FEMA VIOLATIONS BY NEARBUY INDIA PVT. LTD AND NEARBUY SAVED LAKHS OF RUPEES AS FINE FOR FEMA VIOLATIONS

 RBI ISSUED COMPOUNDING ORDER FOR

 FEMA VIOLATIONS BY NEARBUY INDIA

 PVT. LTD AND NEARBUY SAVED LAKHS OF

 RUPEES AS FINE FOR FEMA VIOLATIONS

RBI Vs NEARBUY INDIA PVT. LTD

FACTS OF THE CASE

VIOLATIONS:

The violations were identified as procedural delays, not involving fraud or malicious intent.

The specific contraventions included:

·      Late reporting of foreign inward remittances totalling ₹35.82 crore.

·      Late filing of Form FCGPR (Foreign Currency-Gross Provisional Return) after issuing shares, covering transactions worth ₹73.01 crore.

SECTION 15  OF THE FEMA

The Reserve Bank of India (RBI) has issued a compounding order under Section 15  of the Foreign Exchange Management Act, 1999 (FEMA), in the case of Nearbuy India Private Limited which has resulted in the termination of proceedings against the company for alleged contraventions of the act, the Directorate of Enforcement (ED).

WHAT PROVISIONS OF SECTION 15 OF FEMA SAYS

COMPOUNDING AUTHORITY:

The power to compound contraventions under Section 13 is held by the Directorate of Enforcement (DoE) and authorized officers of the Reserve Bank of India (RBI). The RBI handles most contraventions, except those under Section 3(a) of FEMA, which fall under the DoE.

APPLICATION PROCESS:

An application for compounding must be made to the relevant authority within 180 days. Applications can be submitted through the RBI's PRAVAAH Portal or physically.

EFFECT OF COMPOUNDING:

Once compounded, no further proceedings will be initiated for that specific contravention.

CONDITIONS AND LIMITATIONS:

 Compounding requires admission of guilt and obtaining necessary approvals. Similar contraventions within three years of a previous compounding order are not eligible, nor are serious cases like money laundering.

PENALTY PAYMENT:

The penalty must be paid within 15 days of the order. Failure to pay renders the compounding void and other penalties apply.

Section 15 provides an administrative way for individuals and entities to resolve FEMA breaches by paying a penalty, thus avoiding prolonged legal procedures.

R V SECKAR , FCS, LLB 79047 19295