The Reserve Bank of India (RBI) issued a compounding order on February 20 this year under the Foreign Exchange Management Act (FEMA), 1999, in a Rs 4.1 crore case involving Vikram Mundlur. This action led to the termination of adjudication proceedings against Mundlur for contraventions of FEMA provisions. The RBI’s decision followed the Enforcement Directorate’s (ED) issuance of a “no objection” statement after investigating the case.
Accordingly, the RBI compounded the contraventions based on the ED’s no objection, with a one-time payment of Rs 3,60,495. This compounding order, dated February 20, 2026, concluded the adjudication proceedings related to the contraventions under FEMA against Mundlur. The official statement confirmed that no further litigation would occur in this case.
Section 15 of FEMA allows individuals or companies to admit to a violation, pay a penalty, and regularize the contravention voluntarily, avoiding lengthy legal proceedings. In this instance, the ED initiated an investigation based on credible information, leading to the filing of a complaint under Section 16 of FEMA against Mundlur for contravening FEMA norms involving Rs 4,13,99,368, which the RBI compounded.
Following the ED’s investigation, the adjudicating authority began proceedings by issuing a show cause notice on January 30, 2023, under Section 16 of FEMA against Vikram Mundlur. Mundlur then applied to the RBI for compounding the contraventions under FEMA as per Section 15 of the Act. The ED later issued a no objection for compounding, aligning with the Act’s principles.
