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RBI Closes FEMA Case Against Kakinada Seaports with Compounding Order

The Reserve Bank of India has issued a compounding order, terminating Foreign Exchange Management Act proceedings against Kakinada Seaports Limited. The order followed an Enforcement Directorate investigation and the agency's issuance of a "no objection" certificate. The contraventions involved delays in reporting foreign inward payments and share allotments totaling over Rs 53 crore. The company resolved the case with a one-time payment of Rs 21.68 lakh, ending further litigation.

Key Points: RBI Issues FEMA Compounding Order for Kakinada Seaports

  • RBI issues compounding order
  • ED provided no objection
  • Contraventions involved Rs 53.4 crore delays
  • One-time payment of Rs 21.68 lakh settled case
  • Proceedings terminated
2 min read

RBI issues compounding order for FEMA violations in Kakinada Seaports case

RBI terminates FEMA proceedings against Kakinada Seaports Ltd after a compounding order and a Rs 21.68 lakh payment, following ED investigation.

"This has resulted in the termination of adjudication proceedings under the provisions of FEMA - Enforcement Directorate statement"

New Delhi, Jan 9

The Reserve Bank of India has issued a compounding order on December 12, 2025, under section 15 of the Foreign Exchange Management Act, 1999, in the case of Kakinada Seaports Limited, which has resulted in the termination of the proceedings against the company for alleged contraventions of provisions of FEMA, according to an Enforcement Directorate statement on Friday.

The order was passed by the RBl after issuance of a "no objection" certificate by the ED, the statement said.

Based on credible information received in the case, the ED carried out an investigation against the company under the provisions of the FEMA. After completing the investigation, the ED filed a complaint before the adjudicating authority on September 5, 2024, under Section 16 of the FEMA, pointing out various contraventions under the FEMA for which compounding has now been done.

The contraventions include late reporting of foreign inward payments to the tune of Rs. 22.88 crore, delay in filing of Form FCGPR after issuing shares involving Rs 23.31 crore and delay in the allotment of shares under Paragraph 8 of Schedule 1 to 20 of the FEMA, covering Rs. 7.21 crore.

The adjudicating authority issued a show cause notice dated Sept,mber 30, 2024, under section 16 of FEMA, to the company and its directors and officers who were in charge and responsible for the conduct of the business of the company during the period of the contravention of the law.

The company, later on, filed an application before the RBI for compounding of the contraventions under FEMA as per the provisions of Section 15 of the Act. On reference from the RBI, the ED gave its "no objection" for such compounding in line with the true spirit of the Act, the statement said.

Accordingly, the RBI, on the basis of the "no objection" issued by the ED, has compounded the contraventions vide compounding order dated December 12, 2025, with a one-time payment of Rs 21.68 lakh. This has resulted in the termination of adjudication proceedings under the provisions of FEMA as well as further litigation against the company, the statement added.

- IANS

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Reader Comments

P
Priya S
Rs. 21.68 lakh fine for delays involving crores? Seems like a very light penalty. While I appreciate the "true spirit of the Act" for resolving matters, it might set a precedent where big companies see fines as just a cost of doing business. The deterrent effect seems low. 🤔
R
Rohit P
As someone who works in exports, FEMA compliance is no joke. Even small delays can trigger notices. Glad RBI and ED have a compounding mechanism. It provides a way out for genuine procedural lapses without criminalizing them. Hope more businesses are aware of this option.
S
Sarah B
The coordination between RBI and ED mentioned here is positive. The 'no objection' certificate shows agencies are not working at cross-purposes, which is crucial for a stable business environment. Kakinada is a key port for Andhra, so resolving this helps project continuity.
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Vikram M
The article says "termination of further litigation." This is the key benefit. Our courts are overburdened. If the contravention is technical and not malafide, settling it through compounding frees up judicial time for more serious fraud cases. Pragmatic approach.
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Nikhil C
Delay in reporting Rs. 22+ crore? That's not a small oversight. While the compounding is good, companies, especially in infrastructure like ports, must have better internal controls. Hope the directors take this as a serious warning. National security can be linked to financial flows too.

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