Law · FEMA 1999

Under FEMA, 1999, if a foreign company establishes a liaison office in India without RBI approval and engages in commercial activities, what enforcement action under Section 13(1) can be taken, considering the compounding and penalty limits?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Automatic regularization upon submitting a simple application
2Penalty up to thrice the contravention amount, or up to ₹2 lakh if the amount is quantifiable but unquantified✓
3Complete exemption from penalties for Multi-National Corporations (MNCs)
4Closure only, no financial penalty can be imposed

Correct answer

Penalty up to thrice the contravention amount, or up to ₹2 lakh if the amount is quantifiable but unquantified

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