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CS Executive · Economic, Commercial and Intellectual Property Laws · Foreign Direct Investments - Regulations and Policy

An authorised dealer bank in Pune fails to follow a direction issued by the Reserve Bank on remittances for a foreign investment inflow, and the default continues for several days. Which statement correctly reflects section 11 of FEMA?

The Reserve Bank may, after giving a reasonable opportunity of being heard, impose a penalty of up to ten thousand rupees on the authorised person. For continuing contravention it may add up to two thousand rupees for every day the contravention continues.

  1. AThe Reserve Bank may, after giving reasonable opportunity of being heard, impose a penalty up to ten thousand rupees, plus up to two thousand rupees for each day of continuing contraventionCorrect
  2. BThe Reserve Bank may impose a penalty only up to two thousand rupees in total
  3. CThe Reserve Bank may impose a penalty without any hearing
  4. DThe penalty is up to ten thousand rupees per day from the first day

Explanation

Section 11(3) allows a penalty up to Rs 10,000 on an authorised person contravening a direction, and for continuing contravention an additional penalty up to Rs 2,000 for every day it continues, after a reasonable opportunity of being heard. Option C ignores the hearing requirement and option D misstates the daily amount.

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