Module: | MODULE A: INTERNATIONAL BANKING
Q68: Consider the following statements regarding the Compounding of Contraventions under FEMA as per the April 2025 amendment:
1. Compounding is a mechanism to settle civil contraventions by admitting the lapse and paying a penalty.
2. The Reserve Bank of India has capped the maximum compounding amount at INR 2,00,000 for specific reporting and administrative contraventions.
3. This cap applies even to serious contraventions involving money laundering or terror financing.
Which of the statements given above is or are correct?
2. The Reserve Bank of India has capped the maximum compounding amount at INR 2,00,000 for specific reporting and administrative contraventions.
3. This cap applies even to serious contraventions involving money laundering or terror financing.
Which of the statements given above is or are correct?
✅ Correct Answer: A
🎯 Quick Answer:
Statements 1 and 2 are correct. Statement 3 is incorrect.Structural Breakdown: The Update (April 2025): To promote Ease of Doing Business, the RBI amended the Master Direction to cap penalties for minor, procedural lapses (like late filing of returns) at INR 2,00,000 (2 Lakhs). Exclusions: This cap does not apply to serious, substantive violations (like hawala, unauthorized dealing, or money laundering). Process: Compounding is voluntary but requires the applicant to admit the contravention.
You cannot claim innocence and ask for compounding simultaneously.