FEMA compounding: RBI delegates powers to its Regional Offices
Why in the news
On October 23, 2026, the Reserve Bank of India handed the power to compound certain contraventions of the Foreign Exchange Management Act (FEMA), 1999 to its Regional Offices. Until now, these cases were filed only at the Central Office. RBI said the change is meant to improve customer service.
Key facts
- Circular: A.P. (DIR Series) Circular No. 28/2026-27, addressed to all AD Category-I banks and other Authorised Persons.
- Part A – Overseas Investment: contraventions under the overseas investment rules and regulations, including the Overseas Investment Rules and Regulations of 2022.
- Part B – Borrowing, Lending and Guarantees: applications go to the Regional Office that has jurisdiction over the entity’s registered office or the applicant’s domicile.
- Part C – Multiple categories and Part A cases with no UIN are handled by the Cell for Effective implementation of FEMA (CEFA), Central Office, Mumbai.
- Regional Offices already handled compounding for certain FDI-related contraventions.
- Legal basis: Sections 10(4) and 11(1) of FEMA, 1999. Signed by Dr. Aditya Gaiha, Chief General Manager-in-Charge.
Routing of overseas investment cases
| Regional Office | UIN prefix |
|---|---|
| Ahmedabad | AH |
| Bengaluru | BG |
| Mumbai | BL, BY, PJ |
| Kolkata | BN, CA, GA, GH |
| New Delhi | CG, JM, JR, KA, ND, PT, WR |
| Hyderabad | HY |
| Chennai | KO, MA |
About the framework
The circular builds on A.P. (DIR Series) Circular No. 17/2024-25 of October 1, 2024 and on the Master Directions on Compounding of Contraventions under FEMA, 1999, dated April 22, 2025. RBI says the Master Directions will be updated to include these changes. Banks must inform their customers about the new arrangement.
Exam angle
- Compounding now covers three groups: overseas investment, borrowing and lending, and guarantees.
- Remember CEFA as the Central Office cell for leftover cases.
- Part B cases are routed by jurisdiction, not by UIN.