RBI allows compounding of FEMA case against Genpact India
The RBI has allowed compounding of Genpact India’s FEMA case, ending litigation with a one-time payment of Rs 4.72 lakh. The ED confirmed the closure, emphasizing the policy of promoting ease of doing business and avoiding frivolous litigation
New Delhi: The Enforcement Directorate on Saturday said the RBI had issued a compounding order for Genpact India, against a one-time payment, resulting in termination of a FEMA against the technology major.
The agency had filed a complaint against the company in October 2018 for alleged contravention of the Foreign Exchange Management Act (FEMA) to the tune of about Rs 26 crore. It issued a show cause notice to the firm and its directors in the same month ( and initiated adjudication proceedings.
Genpact subsequently filed an application before the Reserve Bank of India (RBI) for compounding of the said FEMA “contraventions”. On reference from the RBI, the ED issued “no objection” for such compounding in line with the true spirit of the Act (FEMA), and the banking regulator compounded the offence through an order issued on October 17 with a one-time payment of Rs 4.72 lakh to be made by the company, the ED said in a statement.
A compounding order in the regulatory context means a formal decision taken by an authority to settle an offence by allowing the defaulter to pay a monetary penalty instead of facing prosecution.
“This has resulted into termination of adjudication proceedings under the provisions of FEMA against the company and its office bearers as well as further litigation,” it said.
The agency said that a similar compounding had been ordered by the RBI in the case of some other companies. ED Director Rahul Navin, while speaking at an ED Day event in May, had said that to promote the Union government’s policy of ‘ease of doing business’ and to reduce litigation, the agency will encourage defaulters of the civil law to file applications for “compounding” of the offence, in cases it deems appropriate.
Officials earlier told PTI that cases of “petty or technical” FEMA violations would be allowed for compounding to end “frivolous” litigations.
