A S BANKA ADVISORS

If your company has a FEMA lapse to compound on its foreign subsidiary or joint venture, an external commercial borrowing, a loan to or from a non-resident, or a guarantee given across borders, the application goes to the Reserve Bank of India. Until 23 October 2026, applications on overseas investment, and on borrowing and lending, and guarantees, were received at RBI’s Central Office.

RBI A.P. (DIR Series) Circular No. 28/2026-27 (RBI/FED/2026-27/298), dated 23 October 2026, delegates the power to compound these contraventions to select Regional Offices of the Reserve Bank. The circular is short, but it decides where your application goes, and the answer is not always the office nearest your registered office.

What the circular changes, and what it does not

The circular changes the office that receives the application. It is issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, and says the Master Direction on Compounding of Contraventions under FEMA, 1999 (FED Master Direction No. 04/2025-26, 22 April 2025) “shall accordingly be updated”. The procedure and the compounding amount continue to be governed by that Master Direction and the Foreign Exchange (Compounding Proceedings) Rules, 2024.

Overseas investment lapses: the UIN of your foreign entity decides the office

Part A of the circular covers contraventions of the Transfer or Issue of Any Foreign Security Regulations of 2000 (FEMA 19/RB-2000) and 2004 (FEMA 120/RB-2004), the Overseas Investment Rules, 2022, the Overseas Investment Regulations, 2022 (FEMA 400/2022-RB), and any other provision of the Act, rules and regulations as far as the contravention relates to an underlying overseas investment transaction.

These applications go to the Regional Office that matches the prefix of the Unique Identification Number (UIN) assigned to the foreign entity, overseas joint venture or wholly owned subsidiary:

Where no UIN was allotted, the application is submitted at the Cell for Effective implementation of FEMA (CEFA), Foreign Exchange Department, Central Office, Reserve Bank of India, Mumbai.

For a founder, the practical point is that the test is the overseas entity’s UIN, not where the Indian company sits. If your company is registered in Pune and the UIN of its Singapore or US subsidiary starts with ND, the table points the application to New Delhi. Pull the UIN from your ODI records before you prepare anything else.

ECB, loans and guarantees: your registered office decides the office

Part B covers contraventions of the Borrowing or Lending in Foreign Exchange Regulations, 2000 (FEMA 3/2000-RB), the Borrowing and Lending in Rupees Regulations, 2000 (FEMA 4/2000-RB), the Borrowing and Lending Regulations, 2018 (FEMA 3(R)/RB-2018), the Guarantees Regulations, 2000 (FEMA 8/RB-2000) and the Guarantees Regulations, 2026 (FEMA 8(R)/RB-2026). These applications go to the Regional Office with jurisdiction over the registered office of the Indian company or entity, or the place of domicile. The jurisdictions are listed in Part C of Annexure I to the Compounding Master Direction.

The exception every founder with an overseas subsidiary should note: the note to Part B says that where the contravention relates to lending or guarantee transactions undertaken by the applicant towards the foreign entity in which the applicant has made ODI, the application is submitted as per Part A. A loan your Indian company gave its own overseas subsidiary, or a corporate guarantee for that subsidiary’s bank facility, therefore goes to the office for the subsidiary’s UIN prefix, not the office for your registered office.

More than one kind of lapse in one application

Part C provides that an application involving contraventions of multiple categories of transactions, governed by different rules or regulations for which compounding powers sit with different offices, “may be submitted” at CEFA, Central Office, Mumbai. If a single clean-up covers, for example, an inbound investment lapse and an ODI lapse that would otherwise go to two offices, this is the route to look at.

What stays the same under the Master Direction

• Administrative action first: no compounding application is processed until the requisite administrative action, such as completing pending reporting or obtaining approvals, is complete (para 4.2).
• Fee and mode: Rs 10,000 plus applicable GST, by demand draft or electronic mode, with an email intimation of payment not later than 2 hours from payment (para 3.2). The application may be filed physically or through RBI’s PRAVAAH portal (para 3.1), with the Annex II details and the Annex III undertaking (para 3.4).
• Repeat lapses: a contravention committed within three years of a similar contravention that was compounded is not compounded (para 4.1).
• Timelines: the compounding order is to be passed not later than 180 days from receipt of a complete application (para 6.1), and the amount is payable within 15 days of the order (para 7.1). If it is not paid in time, the applicant is deemed never to have applied (para 7.3).
• Other categories: liaison, branch and project office, NRFAD and immovable property contraventions are compounded by the authorities attached to the FED, Central Office Cell, New Delhi (para 2.2). Circular 28 does not deal with them.

Your checklist before you file

1. List every regulation or rule contravened and the transaction each lapse relates to.
2. For an overseas investment lapse, or a loan or guarantee to your own ODI entity, note the UIN prefix and pick the office from the Part A table. No UIN: CEFA, Mumbai.
3. For an ECB, other borrowing or lending, or a guarantee to anyone else, find the Regional Office for your registered office in Part C of Annexure I to the Master Direction.
4. If the lapses fall under different offices, decide whether to file one application at CEFA, Mumbai under Part C.
5. Complete the administrative action, pay the application fee, send the payment email within 2 hours, and attach the Annex II details and the Annex III undertaking.

The carousel sets out the three filing routes, the UIN table and the timelines on one page each: Download the full carousel PDF.

Source: Reserve Bank of India, A.P. (DIR Series) Circular No. 28/2026-27, RBI/FED/2026-27/298, “Delegation of Compounding of certain Contraventions under FEMA, 1999 to Regional Offices of the Reserve Bank”, 23 October 2026, rbi.org.in. Source: Reserve Bank of India, Master Direction, Compounding of Contraventions under FEMA, 1999, FED Master Direction No. 04/2025-26, 22 April 2025, rbi.org.in.

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