Short answer. Most personal and investment transactions for NRIs and OCIs run under the automatic route — no prior RBI approval. Approval is required for specific cases: certain investment structures, breaches of caps, restricted property categories, and to compound past defaults. Check the applicable rules and documentation before acting.
Last reviewed: · Reviewed by Regi Tom Antony, FCA
Routine remittances, NRE / NRO operation, residential / commercial property purchase, listed-equity investment via PIS, and standard FDI in most sectors do not require prior approval. Banks apply FEMA controls through documentation and reporting.
Investments above the NRO USD 1 million cap, FDI in restricted sectors, certain inheritance and gift cases involving non-relatives, and acquisitions in prohibited property categories. Some loans between residents and non-residents also need approval.
If a FEMA breach has already happened — wrong account used for years, late FC-GPR, undisclosed foreign income on the resident side — the right path is usually a documented compounding application. RBI compounds most contraventions for a defined penalty.
Not every lapse needs compounding. Delayed filings under the foreign investment rules — FC-GPR, FC-TRS, the annual Foreign Liabilities and Assets return — can usually be regularised by paying a late-submission fee. Compounding is for substantive contraventions, such as an investment made without approval where one was needed, or funds routed through the wrong account.
A compounding application is filed with the relevant RBI office, with a chronology of the contravention, supporting documents and evidence that the position has been regularised. RBI computes a compounding amount with reference to the sum involved and how long the contravention lasted. Once it is paid, no further proceedings are taken for that contravention.
Where a transaction genuinely needs prior approval — investment in a government-route sector, pricing outside FEMA norms, or acquiring a restricted category of property — build in time, because approvals take weeks to months. Do not sign binding agreements or move money before the approval is in hand; doing so turns an approval case into a compounding case.
If your situation involves money already moving, a sale already agreed, or a deadline already in your inbox, advisory only helps if it comes in early. Common situations we help with:
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