The Reserve Bank of India (RBI) issued a compounding order on February 10 under the Foreign Exchange Management Act, 1999 (FEMA) for Metrocorp Infrastructure Limited. This action led to the termination of adjudication proceedings against the company for violations of the law. The order followed the issuance of “No Objection” by the Directorate of Enforcement (ED).
The ED conducted an investigation based on credible information received in the case. Subsequently, a complaint was filed under FEMA for late reporting of foreign inward payments amounting to Rs 110.62 crore. Adjudication proceedings were initiated by the Adjudicating Authority through a Show Cause Notice to the company and its responsible directors.
Metrocorp Infrastructure Limited applied to the RBI for compounding the contraventions under FEMA as per Section 15 of the Act. After receiving a no objection from the ED, the RBI compounded the violations with a one-time payment of Rs 1,03,320. This resulted in the termination of adjudication proceedings and further litigation against the company under FEMA.
The RBI, empowered under Section 15 of FEMA, 1999, can compound most foreign exchange contraventions, excluding certain transactions like hawala. Penalties can be up to 300% of the amount or Rs 200,000 under specific cases as per the new 2025 guidelines. Orders are typically issued within 180 days of assessing violations.
