Why FDI/ODI Reporting Delays Matter?
For foreign businesses and Indian corporates, delays in FDI reporting (foreign investment in India) or ODI reporting (Indian investment abroad) can trigger FEMA violations.
Common Issue: Delayed FDI & ODI Reporting
- Foreign investors entering India (FDI)
- Indian startups and corporates investing abroad (ODI)
Result: FEMA violation → risk of penalties, RBI enforcement, and compliance blocks.
Two Ways to Fix Delayed Reporting
1. Late Submission Fee (LSF)
- Applies if delay is less than 3 years
- Paid via Authorized Dealer (AD) Bank
- Simple compliance regularization
Recommended for quick, minor delays.
2. Compounding with RBI
- Required if delay is more than 3 years
- Formal application to RBI + legal order
- Provides legal closure of the violation
Compounding is especially important for companies planning fundraising or exits, it removes compliance uncertainty.
What’s New in FEMA Compounding (2024–25)?
- RBI officers can now handle larger cases (up to ₹5 crore)
- Penalty for reporting delays capped at ₹2 lakh per contravention
- Re-application is treated as a fresh case (no extra 50% penalty)
- Overall penalty capped at 300% of the amount involved
But remember: Not all contraventions are compoundable. Cases involving money laundering, terror financing, or national security are excluded.
Why Compliance Matters for FDI & ODI
Ignoring FDI/ODI reporting can lead to:
- Ineligibility for future FDI/ODI transactions
- Increased audit risk from RBI and FEMA regulators
- Penalties that could erode investor confidence
Act fast:
- < 3 years → Go for LSF (simple, cheaper)
- 3 years → Choose Compounding (legal closure)
If you’ve missed your FDI or ODI filing deadlines,you still have a chance to regularize without severe consequences. By leveraging LSF or Compounding, you can close compliance gaps and protect your business from penalties.
Reach out to FinStackk to stay ahead on FEMA compliance, avoid costly mistakes, and focus on growth.