On 23 October 2026, the Reserve Bank of India issued A.P. (DIR Series) Circular No. 28/2026-27. It delegates powers to compound certain contraventions under the Foreign Exchange Management Act, 1999 (FEMA) to select Regional Offices. Until now, contraventions involving overseas investment were compounded at the RBI’s Central Office. The change follows the RBI’s earlier move to process overseas investment references through its Regional Offices.
What changed
Compounding applications for overseas investment contraventions now go to the Regional Office mapped to the UIN prefix of the foreign entity, joint venture or subsidiary. For example, UIN prefixes ND, CG, JM, JR, KA, PT and WR go to New Delhi, and BY, BL and PJ go to Mumbai. If no UIN has been allotted, the application goes to the Foreign Exchange Department’s compounding cell (CEFA) at the Central Office in Mumbai.
Contraventions relating to borrowing, lending and guarantees go to the Regional Office for the Indian entity’s registered office or the applicant’s domicile. Lending to, or guarantees for, a foreign entity in which the applicant has made overseas direct investment follow the overseas investment route. Applications covering several categories handled by different offices go to CEFA. The April 2025 Master Directions on compounding will be updated.
Why it matters
Late filings and reporting gaps for overseas investments, such as missed annual performance reports or late reporting of share transfers and guarantees, are among the most common FEMA defaults for Indian startups and IT companies with foreign subsidiaries. Compounding is usually the most cost-effective way to regularise them, and handling them at Regional Offices should make the process simpler.
Companies registered in Noida, Greater Noida and Ghaziabad will need to check their Regional Office mapping. Under the circular, overseas investment matters are routed by the foreign entity’s UIN prefix, not by where the Indian company is registered. A Lok Sabha answer of 27 July 2026 showed 858 compounding applications disposed of in 2025-26, so the volume is significant.
Practical points
- Note the UIN of each foreign entity before filing. It decides the office.
- List every contravention across overseas investment, borrowing and guarantees. If they fall under different offices, file with CEFA.
- Check whether ED proceedings or an ED no-objection are relevant before applying.
- Payment details and the office where the application is filed must match, to avoid processing delays.
Sources: RBI, 23 Oct 2026; TaxGuru, 29 Jul 2026.
For a confidential discussion on FEMA compliance and compounding, see FEMA and Cross-Border Matters.
General legal information only; not legal advice or solicitation.
