RBI Compounds FEMA Violations of Sai Rayalaseema, Cigniti, and ZIFY Tech
The Reserve Bank of India (RBI) has issued compounding orders under Section 15 of the Foreign Exchange Management Act, 1999 (FEMA) against Sai Rayalaseema Paper Mills, Cigniti Technologies Limited, and ZIFY Tech Solutions Private Limited. The orders, which were passed following the issuance of "No Objection" clearances by the Directorate of Enforcement (ED), allow the three companies to settle their respective foreign exchange violations through one-time payments.
According to a statement from the ED, the compounding orders have resulted in the termination of all ongoing legal proceedings against the companies for their contraventions under FEMA.
In the case of Sai Rayalaseema Paper Mills Ltd, the RBI compounded the violations with a one-time fine of Rs 19.18 lakh. The ED had initially launched an investigation into the paper mill based on credible information. After finding that the company had breached the provisions of FEMA, the agency registered a case against it. Sai Rayalaseema Paper Mills subsequently filed an application with the RBI to compound the contraventions, and the central bank issued the final order on April 13.
The second order was issued in the case of Cigniti Technologies Limited and its Managing Director, C. V. Subramanyam. The termination of proceedings against the company was finalized after a one-time payment of Rs 13.82 lakh by Cigniti Technologies and an additional payment of Rs 1.38 lakh by Subramanyam.
Furthermore, the RBI issued a compounding order on June 10 regarding FEMA violations by ZIFY Tech Solutions Private Limited. The case against the firm involved a delay in filing its inward remittances under the act. The proceedings were officially terminated following a one-time payment of Rs 26,080 by the company.
Section 15 of FEMA provides a legal mechanism for individuals and companies to voluntarily admit to violations of foreign exchange regulations. By paying a designated penalty, entities can regularize their contraventions without undergoing lengthy litigation or formal legal proceedings.
