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FAQs on Compounding of Contraventions under FEMA, 1999

Q.5. Are any fees required to be paid for seeking compounding? +

Ans. Yes. All compounding applications shall be submitted along with the prescribed fee of ₹10,000/- (plus applicable GST, which at present is 18%) by way of demand draft in favour of “Reserve Bank of India” and payable at the concerned Regional Office/ CO Cell, New Delhi/ Central Office or through National Electronic Fund Transfer (NEFT), or other permissible electronic or online modes of payment. The necessary details for making the payment through electronic mode is provided in Annexure I in Directions – Compounding of contraventions under FEMA, 1999. In case application fee is paid through NEFT or other permissible electronic mode of payment, it may be ensured that intimation of payment of applications fee, to respective RO, CO Cell, or Central Office, as case may be, shall be made as soon as possible but not later than 2 hours from time of payment, through an email as per the template provided in Para B of Annexure I of Directions – Compounding of contraventions under FEMA, 1999.

It may further be noted that in case compounding application is returned for any reason, The application fee, if paid, shall not be returned in case of return of the compounding application. However, in case such applications are re-submitted, then the application fee need not be paid again.

Q 5. Does the PSS Act, 2007 define what is a “payment obligation”, “payment instruction”, “payment system” and other commonly used terms like “electronic fund transfer”, “gross settlement system”, “netting”, “settlement”, “systemic risk”, “system participant” and “system provider”?

Ans. Yes, these terms are defined in Section 2 (1) of the PSS Act, 2007.

5. Are non-CTS cheques invalid?

Banks have been advised to issue only CTS-2010 standard compliant cheques from September 30, 2012. Earlier, there were separate clearing sessions for non-CTS cheques. However, they were discontinued with effect from December 31, 2018. As of now, non-CTS cheques cannot be presented in CTS. Bank have been advised to withdraw the non-CTS cheques from the customers. However, a non-CTS cheque continues to be valid as a negotiable instrument.

6. Whether the ‘Basic Savings Bank Deposit Account’ can be opened by only certain types of individuals like poor and weaker sections of the population ? +

No. The 'Basic Savings Bank Deposit Account' should be considered as a normal banking service available to all customers, through branches.

Q6: In case of transfer of pools of loans in compliance with clause 36 of the MD-TLE, can prudential norms be applied at the pool level? +

Ans: The treatment in clause 36 is only to facilitate transfer of loans where due to operational or other constraints, the transferee does not conduct a loan level due diligence. This is without prejudice to the requirement under Clause 46 to apply prudential norms at the individual loan level.

6. Is there any minimum / maximum amount stipulation for RTGS transactions? +

Ans. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper or maximum ceiling.

6. How many PPI issuers have been approved by RBI? Where can I find the list of authorised bank and non-bank PPI issuers? +

Ans. The list of PPI issuers is available on the RBI website at the links https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2491 (bank-PPI issuers) and https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=12043 (non-bank PPI issuers).

6. Why will final WPI be used with a lag of four months? +

Final monthly WPI will be used as reference WPI for 1st day of the calendar month. The reference WPI for intermittent days, i.e. dates between 1st days of the two consecutive months will be computed through interpolation.
For interpolation, two months final WPI should be available throughout the month. As final WPI is available with a lag of about two and half months (e.g. final WPI February 2013 will be released in mid-May 2013), two months final WPI could be available only with a lag of four months.
In view of above, the four months lag has been chosen for final WPI to be considered as reference WPI for 1st day of the calendar month. For example, December 2012 final WPI will be taken as reference WPI for 1st of May 2013 and January 2013 final WPI will be taken as reference WPI for 1st of June 2013.

6. Can the ATS application be transferred to any other office / department / section ? +

Yes. The applicant will immediately receive a mail conveying details of the original office / department where the application was submitted and the details of the office / department / section to which it has been transferred. The information can also be ascertained through ATS by the applicant under ’My Application’. The entire history will be shown.

Q.6. If a company does not fulfill the principal business criteria for factoring and has no intention of getting itself registered as a Factor with the Bank, can it continue to do factoring activities with its group entities. +

Ans : No. As per Section 3 of the Factoring Act 2011, no Factor can commence or carry on the factoring business without a) obtaining a CoR from the Reserve Bank, b) fulfilling the principal business criteria.