RBI lets regional offices compound FEMA lapses in overseas investment and loans

The Reserve Bank of India (RBI) has delegated the power to compound certain contraventions under the Foreign Exchange Management Act, 1999 (FEMA) to select Regional Offices. A circular dated 23 October 2026 covers contraventions linked to overseas investments, and to borrowing, lending and guarantee transactions. Compounding is the process of settling an admitted contravention with the RBI.

What Happened

According to the circular, compounding applications for overseas investment and for borrowing, lending and guarantee transactions were so far received at the RBI's Central Office. Certain foreign direct investment cases were already handled by Regional Offices. The RBI said it has now delegated these powers as well, "as a measure for promoting customer service".

For overseas investment contraventions, applications must go to a Regional Office based on the prefix of the Unique Identification Number (UIN) given to the foreign entity, overseas joint venture or wholly owned subsidiary. The offices listed are Ahmedabad (AH), Bengaluru (BG), Mumbai (BL, BY or PJ), Kolkata (BN, CA, GA or GH), New Delhi (CG, JM, JR, KA, ND, PT or WR), Hyderabad (HY) and Chennai (KO or MA). Where no UIN was allotted, applications go to the Cell for Effective implementation of FEMA (CEFA) at the Central Office in Mumbai.

For borrowing, lending and guarantee contraventions, applications go to the Regional Office with jurisdiction over the registered office of the Indian company or entity, or the applicant's place of domicile. If the lending or guarantee was given to a foreign entity in which the applicant has made an overseas direct investment, the overseas investment route applies. Applications covering several categories handled by different offices may be filed with CEFA.

What It Means

Companies and individuals seeking to settle such FEMA lapses can now file with the relevant Regional Office instead of only the Central Office, under the routing rules above. The RBI said its Master Directions on compounding will be updated, and asked banks dealing in foreign exchange to bring the circular to their customers' notice.

Source: RBI notification