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CS Executive · Economic, Commercial and Intellectual Property Laws · Overseas Direct Investment

Kaveri Exports Pvt Ltd, an authorised person, contravenes an RBI direction and the contravention continues for several days. Under Section 11(3) of FEMA, what penalty can the Reserve Bank impose after giving a 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 each day the contravention continues, after giving a reasonable opportunity of being heard, as laid down in Section 11(3).

  1. AUp to Rs 10,000, and an additional penalty up to Rs 2,000 for every day the contravention continuesCorrect
  2. BUp to thrice the sum involved, with Rs 5,000 per day thereafter
  3. CUp to Rs 2 lakh, with no daily penalty
  4. DUp to Rs 2,000 only, with Rs 10,000 for every continuing day

Explanation

Section 11(3) provides a penalty up to ten thousand rupees and, for continuing contravention, an additional penalty up to two thousand rupees per day. The thrice-the-sum and Rs 5,000 per day figures belong to Section 13(1) and apply to general contraventions after adjudication, not to this provision. The last option reverses the amounts.

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