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    Compounding due to Non Issuance of FIRC and KYC

    Posted By : Kamal / Published on : 11-Aug-2021 01:22 PM / View : 690 / Comment : 1

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    Dear Folks,

    This is with reference to FEMA compounding due to the non-issuance of FIRC by the intermediary AD.

    Initially, the FDI amount came to an AD bank which was further remitted to the investment account managed by the invest company with another scheduled bank. The first AD Bank denied the FIRC on the ground that the mode of remittance of FDI is not allowed under their exchange house, hence, they would not be able to issue to FIRC. However, note that the FDI is completely in compliance of the FEMA (Non-Debt) Rules.

    The company wants to file the compounding application with RBI for non-filing the FC-GPR, and non-reporting, and non-issuance of FIRC. Please confirm if the same is viable or not.

    Read more on : firc issuance compounding

    • In this case, if the AD bank has refused to issue the FIRC due to its internal policy or operational constraints, the company can approach the RBI for compounding of the violation. The company should provide all the necessary documents and information related to the FDI transaction, including the details of the investment, the remittance, and the reasons for the AD bank's refusal to issue the FIRC.

      The compounding application should be filed with the RBI in the prescribed format along with the requisite fees. The RBI will review the application and determine the appropriate penalty based on the severity of the violation and other relevant factors.

      It is important to note that the compounding process is voluntary, and the RBI may initiate legal action against the company for non-compliance with FEMA regulations. Therefore, it is advisable to ensure compliance with all the applicable regulations and guidelines related to FDI transactions and seek professional advice before initiating any such transaction.

      Additionally, it is recommended that the company explore other options for obtaining the FIRC, such as contacting the AD bank again to resolve the issue or seeking the help of the RBI or other regulatory authorities.

      13-04-2023 / 11:59:20 AM
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