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

Under FEMA, an authorised dealer bank handling inward FDI remittances ignores a Reserve Bank direction on reporting and also fails to file a return the Reserve Bank had directed it to file. What is the maximum penalty framework the Reserve Bank may 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 every day a continuing contravention lasts, after a reasonable hearing. This follows section 11(3) of FEMA for breach of directions or failure to file returns.

  1. AUp to ten thousand rupees, and for continuing contravention an additional amount up to two thousand rupees for each day it continuesCorrect
  2. BUp to two thousand rupees, and for continuing contravention an additional amount up to ten thousand rupees per day
  3. CUp to ten thousand rupees only, with no additional amount for continuing contravention
  4. DPenalty equal to thrice the sum involved in the remittance

Explanation

Section 11(3) provides for a penalty which may extend to ten thousand rupees and, for continuing contravention, an additional penalty up to two thousand rupees per day. The second option reverses the figures. The third ignores the continuing-contravention component, and the fourth is a sum-based penalty not found in section 11(3).

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