RBI Compounds FEMA Violation Against Genpact India On Rs 4.72 Lakh Payment

The Enforcement Directorate (ED) on Saturday said the Reserve Bank of India (RBI) has issued a compounding order in a Foreign Exchange Management Act (FEMA) case against Genpact India, following a one-time payment by the company, bringing the proceedings against the technology firm to an end.

The ED had filed a complaint against Genpact India in October 2018 over alleged violations of FEMA amounting to around Rs 26 crore. A show-cause notice was issued to the company and its directors in the same month, and adjudication proceedings were subsequently initiated.

Genpact later approached the RBI seeking compounding of the alleged FEMA contravention. On a reference from the RBI, the ED issued a "no objection" to the proposal, stating that the move was in line with the true spirit of the FEMA. The RBI thereafter compounded the offence through an order dated October 17, directing Genpact India to make a one-time payment of Rs 4.72 lakh, the ED said in a statement.

A compounding order, in regulatory terms, allows an alleged offender to settle a case by paying a monetary penalty instead of facing prosecution. According to the ED, the RBI's order has resulted in the termination of adjudication proceedings under FEMA against Genpact India and its office bearers, as well as the closure of any further litigation in the matter.

The agency noted that similar compounding orders have been passed by the RBI in cases involving other companies as well.

ED Director Rahul Navin had earlier said at an ED Day event in May that, in line with the Union government's policy of promoting 'ease of doing business' and reducing litigation, the agency would encourage defaulters under civil laws to seek compounding of offences in appropriate cases.

Officials had previously told PTI that instances involving "petty or technical" FEMA violations would be considered for compounding in order to put an end to what were described as "frivolous" litigations.