June 2019

FEMA FOCUS

BHAUMIK GODA | SAUMYA SHETH
Chartered Accountants

ANALYSIS OF RECENT COMPOUNDING ORDERS

An analysis of some interesting compounding orders passed by the Reserve Bank of India in the months from November, 2018 to March, 2019 and uploaded on the website[1]  are given below. The article refers to regulatory provisions as existing at the time of offence. Changes in regulatory provisions are noted in the comments section.

                                                                                                

BORROWING OR LENDING IN FOREIGN EXCHANGE

A. Respoint Shoes Private Limited

Date of Order: 11th October, 2018

Regulation: FEMA 3/2000-RB Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000

 

ISSUE

1)   Loan proceeds were used to meet company formation and related expenses, which were not permitted end-uses;

2)   Drawdown of proceeds before obtaining Loan Registration Number (LRN);

3)   Reporting guidelines not met.

 

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