Individuals and companies can now approach the Indian central bank to settle violations of foreign exchange regulations. The Reserve Bank of India (RBI) has been empowered by the Indian government to settle directly violations of the Foreign Exchange Management Act (FEMA).
Under FEMA, a violation can attract penalties of up to 300 per cent of the amount involved. However, if the party involved chooses to compound (i.e. admit the violation and pay a penalty) a lower penalty may be levied, depending on the seriousness of the offence. Settlements are usually agreed within six months, says a spokesman for Citigroup in Mumbai.