FEMA1 min read
Compounding Authority
Under FEMA, the Reserve Bank of India and the Enforcement Directorate are the two compounding authorities. RBI compounds most FEMA contraventions; ED handles cases involving serious money laundering or fraud.
Last updated: 17 May 2026
Frequently Asked Questions (FAQs)🔗
Q1. What is Compounding Authority in Indian corporate law?▼
Under FEMA, the Reserve Bank of India and the Enforcement Directorate are the two compounding authorities. RBI compounds most FEMA contraventions; ED handles cases involving serious money laundering or fraud.
Q2. Why is Compounding Authority important for compliance?▼
Compounding Authority is governed by the Foreign Exchange Management Act, 1999 and regulated by RBI. Understanding this concept is essential for ensuring regulatory compliance, avoiding penalties, and making informed corporate decisions in India.
Q3. Who should know about Compounding Authority?▼
Compounding Authority is relevant for company secretaries, compliance officers, chartered accountants, corporate lawyers, board members, and all professionals dealing with FEMA regulatory matters in India.
Contextual Analysis & Regulatory Updates🔗
Read our latest analysis and critical updates on corporate circulars related to FEMA:
RBI Issues Foreign Exchange Management (Deposit) Sixth Amendment Regulations, 2026 — SNRR Account Norms Eased
Published: 30 June 2026
RBI Withdraws 732 Defunct FEMA Circulars Under Regulatory Rationalisation Drive (A.P. DIR Series Circular No. 18, 2026)
Published: 25 June 2026
FEMA 395(4)/2026-RB: NRI/OCI Investment Payment Rules Amended — NRO Accounts Permitted for NPS, Designated Rupee Account Mandated
Published: 23 June 2026