The Reserve Bank of India (RBI) has issued a compounding order under Section 15 of the Foreign Exchange Management Act, 1999 (FEMA) in the case of M/s Deccan Digital Networks Private Limited, resulting in the termination of adjudication proceedings against the company for alleged contraventions of foreign exchange regulations.
The compounding order was issued on January 14, 2026, after the Enforcement Directorate (ED) conveyed its “No Objection” to the proposal for compounding the violations.
The case dates back to an investigation initiated by the ED based on credible information regarding potential FEMA violations by the company. After completing its probe, the ED filed a complaint under Section 16 of FEMA before the Adjudicating Authority on December 27, 2012.
According to the complaint, the alleged contraventions pertained to delayed reporting of foreign inward remittances and delayed filing of statutory forms related to the issuance of shares against foreign investment.
Specifically, the company was accused of late reporting of foreign inward payments under Para 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, involving an amount of ₹11,82,84,399. Additionally, it was alleged that the company had delayed filing of Form FCGPR (Foreign Currency-Gross Provisional Return) under Para 9(1)(B) of the same schedule, covering ₹11,82,84,400.
Following the ED’s complaint, adjudication proceedings were initiated by the Adjudicating Authority through issuance of a show cause notice dated January 16, 2013, under Section 16 of FEMA to the company and its directors/officers who were responsible for the conduct of its business during the relevant period.
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Subsequently, the company filed an application before the RBI seeking compounding of the alleged contraventions under Section 15 of FEMA. Under the Act, compounding allows entities to voluntarily admit procedural lapses and settle matters by paying a monetary penalty, thereby avoiding prolonged litigation.
Upon reference from the RBI, the ED examined the request and issued a “No Objection” for compounding, stating that such action was in line with the spirit and provisions of FEMA. Based on this clearance, the RBI passed the compounding order on January 14, 2026.
As per the order, the alleged contraventions were compounded upon payment of a one-time amount of ₹1,03,333 by the company. The payment has resulted in the closure of adjudication proceedings under FEMA against Deccan Digital Networks Private Limited in relation to the cited violations.
Officials indicated that compounding does not amount to a finding of criminal guilt but provides a mechanism for resolving regulatory non-compliance of a procedural nature, subject to payment of prescribed fees. With the compounding order in place, further litigation in respect of these specific contraventions stands terminated.
The development underscores the regulatory framework under FEMA, which permits structured resolution of reporting lapses while maintaining oversight of foreign exchange transactions in the country.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
