In a significant regulatory resolution, the Reserve Bank of India (RBI) has issued a compounding order against Deccan Digital Networks Private Limited, effectively closing a long-standing Foreign Exchange Management Act (FEMA), 1999 violation case. The order, passed under Section 15 of FEMA on January 14, 2026, brings an end to all further legal proceedings against the company.
The case originated from credible intelligence received by the Enforcement Directorate (ED), which suspected breaches in foreign exchange reporting norms. Following a thorough investigation, ED filed a complaint on December 27, 2012, under Section 16 of FEMA before the competent authority. The allegations centered on delays in reporting foreign inflows and failure to submit mandatory forms.
Investigations revealed that the company had received foreign funds amounting to approximately Rs 11.82 crore but failed to report these receipts promptly. Additionally, the required FC-GPR form for share issuance was not filed within the stipulated timeframe, contravening essential FEMA compliance requirements.
On January 16, 2013, a show-cause notice was issued to the company, its directors, and responsible officers. In response, Deccan Digital Networks applied for compounding under Section 15 before the RBI. After ED provided a ‘no objection’ clearance upon RBI’s request, the central bank approved the settlement.
The resolution came with a one-time payment of Rs 1,03,333 by the company. This compounding order terminates all ongoing adjudication proceedings and potential litigation under FEMA, 1999, allowing the company to move forward without further regulatory overhang.
This development underscores RBI’s approach to regulatory enforcement through compounding mechanisms, promoting compliance while avoiding protracted legal battles. It serves as a reminder for businesses handling foreign investments to adhere strictly to reporting timelines.