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Home / RBI Compliance / FEMA Compounding
Last updated: 2 October 2026
If a FEMA filing or approval was missed and the late fee route is no longer available, compounding with RBI lets you settle the contravention by paying a compounding amount. Expertvuw’s team prepares the application, supporting documents and chronology under RBI’s 2025 compounding directions.
Compounding is a voluntary process under section 15 of FEMA, 1999 through which a person who has contravened FEMA can admit the contravention and settle it by paying an amount fixed by RBI, avoiding adjudication proceedings. Common cases include delayed reporting of foreign investment, allotting shares beyond the permitted time, overseas investment reporting delays and pricing breaches.
The process is governed by RBI’s Master Direction on Compounding of Contraventions under FEMA, 1999, issued in April 2025. Applications are filed online through RBI’s PRAVAAH portal or physically, with a non-refundable application fee of ₹10,000 plus GST. RBI aims to pass the compounding order within 180 days of a complete application, and the compounded amount must be paid within 15 days of the order.
The 2025 revisions simplified the calculation of compounding amounts and removed the earlier escalation for repeat applications. Some serious contraventions, including those involving money laundering or matters under investigation by the Directorate of Enforcement, are not compounded by RBI.
Basis: FEMA, 1999 (section 15); Foreign Exchange (Compounding Proceedings) Rules, 2024; RBI Master Direction – Compounding of Contraventions under FEMA, 1999 (April 2025, as updated). Last updated: 27 September 2026.
Compounding is initiated by the applicant admitting the contravention.
₹10,000 plus GST, non-refundable.
Applications can be filed on RBI's PRAVAAH portal.
RBI aims to decide within 180 days of a complete application.
The compounded amount must be paid within 15 days of the order.
Serious cases, including those under ED investigation or involving money laundering, are excluded.
Most returned applications are incomplete, not wrong.
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Compounding connects with these services.
Ongoing FEMA compliance for companies.
Foreign investment reporting on FIRMS.
APR and ODI reporting.
Compounding for NBFC-related matters.
More in this section: FC-TRS Filing on FIRMS · FLA Return Filing · Overseas Subsidiary Setup from India · FDI Compliance in India
Identify each contravention and its period.
Complete pending filings where required.
Draft the application and chronology.
Submit on PRAVAAH with the fee.
Respond to RBI queries and hearings.
Pay the amount and record the order.
Close out the matter completely.
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A process under section 15 of FEMA where a person admits a contravention and settles it by paying an amount fixed by RBI.
₹10,000 plus GST, which is non-refundable.
RBI aims to pass the order within 180 days of receiving a complete application.
No. Serious contraventions, including cases under ED investigation or involving money laundering, are excluded.
No. The late submission fee regularises delayed reporting within three years; compounding applies when that route is not available or for other contraventions.
ACS – Director, Expertvuw Management Pvt Ltd
FEMA filings are prepared by Expertvuw’s team. Certificates required by the AD bank or RBI are issued by independent practising professionals, and representation before RBI or the Directorate of Enforcement is made by authorised professionals or advocates.