RBI Caps Compounding Amount at ₹2 Lakh for Specified FEMA Contraventions

The Reserve Bank of India (“RBI”), through a circular dated April 24, 2025 (accessible [here]), has amended the Master Directions on Compounding of Contraventions under the Foreign Exchange Management Act, 1999 (“FEMA”), by introducing a new provision—Paragraph 5.4.II.vi.

As per the amendment, the compounding amount for each contravention listed under Row 5 of the computation matrix in the Master Directions (accessible [here]) shall be capped at ₹2,00,000. This cap is subject to the discretion of the compounding authority, which may take into account the nature of the contravention, any exceptional circumstances, and considerations of public interest when determining the final compounding amount.