What do you mean by Compounding of Contraventions ?

Contravention is a breach of the provisions of any Act and rules/ regulations / notification / orders/directions/circulars issued thereunder. Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal. The Reserve Bank of India is empowered to compound any contraventions under section 13 of the Foreign Exchange Management Act, 1999 except the contravention under Section 3(a), for a specified sum after offering an opportunity of personal hearing to the contravener. It is a voluntary process in which an individual or a corporate seeks compounding of an admitted contravention. It provides comfort to any person who contravenes any provisions of Foreign Exchange Management Act, 1999 (except section 3(a) of the Act) by minimizing transaction costs. Willful, malafide and fraudulent transactions are, however, viewed seriously, which will not be compounded by the Reserve Bank. Any person who contravenes any provision of the Foreign Exchange Management Act, 1999 except section 3(a) or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act or contravenes any condition subject to which an authorization is issued by the Reserve Bank, can apply for compounding to the Reserve Bank. Applications seeking compounding of contraventions under section 3(a) of Foreign Exchange Management Act, 1999 may be submitted to the Directorate of Enforcement.