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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

An authorised person fails to file a return that the Reserve Bank had directed it to file. The contravention continues for 5 days after the Reserve Bank's penalty order. Which statement correctly reflects the penalty framework under Section 11(3)?

After giving reasonable opportunity of being heard, the Reserve Bank may impose a penalty up to ten thousand rupees on the authorised person, plus up to two thousand rupees for every day the contravention continues. Hearing is mandatory and continuing breaches attract the daily additional penalty.

  1. APenalty may be imposed without any hearing, since it is a routine matter
  2. BPenalty may extend to Rs 10,000 plus up to Rs 2,000 for each day the contravention continues, after reasonable opportunity of being heardCorrect
  3. CPenalty may extend to Rs 2,000 only, with Rs 10,000 for each continuing day
  4. DPenalty is limited to Rs 10,000 with no additional amount for continuing contravention

Explanation

Section 11(3) permits a penalty up to ten thousand rupees, and for continuing contravention an additional penalty up to two thousand rupees per day, after giving reasonable opportunity of being heard. Option three reverses the amounts, and the hearing is mandatory.

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