FEMA and FDI Compliance Services

FEMA compliance means following the Foreign Exchange Management Act, 1999 and the rules, regulations and directions made under it whenever money or investment crosses India's border – foreign direct investment (FDI) into an Indian company or LLP, overseas investment by an Indian business or resident, external commercial borrowings, exports, imports and remittances. IMAK Advisory, an ICAI-registered CA firm in Bengaluru, helps startups, companies, LLPs and NRIs across India plan foreign investment, value shares, file the forms on the Reserve Bank's portals, and regularise past delays through late submission or compounding.

Most FEMA compliance problems are not about large frauds. They are about a form filed late, a share allotment made after the 60-day window, a valuation report dated after the allotment, or an annual return never filed because nobody knew it applied. Each of these shows up later – in due diligence for the next funding round, in a bank's review of an outward remittance, or in the statutory audit. This page explains what our FEMA compliance service covers, how FDI and overseas investment are reported, and the Reserve Bank portals and facts people search for: the RBI FIRMS portal, the RBI PRAVAAH portal, CIMS (RBI), the RBI CMS portal, the RBI IFSC code, the RBI floating rate bond, the RBI NBFC upper layer list, and the RBI governor 2025 question – RBI Governor Sanjay Malhotra.

• FDI structuring: automatic route, government route and sector caps
• Share valuation for issue and transfer under the pricing guidelines
• Reporting on the FIRMS portal: FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP and downstream investment
• Annual return on foreign liabilities and assets (FLA)
• Overseas direct investment (ODI) reporting and annual performance reports
• External commercial borrowing reporting
• Late submission fee and compounding of contraventions

We work with the Indian company or LLP, its authorised dealer (AD) bank, the company secretary and, where needed, a lawyer. Our part of FEMA compliance is the numbers, the forms and the timeline.

1. Review the investor, the instrument and the sector: route, cap, conditions and any approval needed
2. Value the shares or other instruments under the pricing guidelines before the issue or transfer
3. Check the inward remittance, KYC by the AD bank and the date money was received
4. Track the 60-day window for allotment and prepare the allotment papers with the company secretary
5. Register the entity and its business user on the FIRMS portal
6. Prepare and file the form – FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP or DI – with all attachments
7. Answer the AD bank's queries until the form is approved
8. File the annual FLA return and keep a FEMA compliance register of every foreign investment event

For businesses investing abroad, we prepare overseas investment reporting through the AD bank and the annual performance report. For borrowers, we prepare the external commercial borrowing forms and monthly returns. For individuals, we explain the Liberalised Remittance Scheme, NRI accounts and the related tax documents.

FEMA compliance is not only for large multinationals. Any Indian business or person with a cross-border transaction of capital may have a reporting duty, and the most common triggers are listed below.

Most sectors allow 100% FDI under the automatic route: the company issues shares, receives money through banking channels, and reports afterwards. Some sectors have caps or need government approval – for example certain defence, broadcasting, print media and insurance activities, each with its own conditions. A short list of activities is closed to FDI, including lottery, gambling and betting, chit funds, Nidhi companies, the real estate business, trading in transferable development rights, and manufacturing of cigars and cigarettes from tobacco.

Since April 2020, an entity of a country that shares a land border with India, or an investor whose beneficial owner is situated in or is a citizen of such a country, can invest only under the government route. This applies even to small stakes and to transfers that change beneficial ownership, so the investor's ownership chain must be checked before money comes in.

For FEMA compliance, whether a business is in a permitted sector depends on what it actually does, not on its name. An edtech company that also runs a lending book, or a marketplace that holds inventory, may fall under different rules from those its founders expect.

Shares or convertible instruments issued to a person resident outside India cannot be priced below fair value. For an unlisted company, fair value is worked out under an internationally accepted pricing methodology on an arm's length basis and certified by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant. For a listed company, the SEBI pricing rules apply.

For FEMA compliance, the valuation report must be dated close to the transaction and before it, not after. The same allotment may also need a registered valuer's report under the Companies Act for a preferential issue, and a valuation under the Income-tax law; we plan these together so the three numbers do not contradict each other.

The RBI FIRMS portal – Foreign Investment Reporting and Management System – is where most FDI reporting is done. Reporting has two steps. First, the Indian entity registers through the Entity Master Form and creates a business user, verified by its AD bank. Second, each investment event is reported through the Single Master Form (SMF), which contains the individual forms.

The AD bank checks the form and may approve it, return it for changes or reject it. A rejected form does not stop the clock, so a refiled form can be late even if the first attempt was on time. Typical FEMA compliance reasons for return are a mismatch between the remittance amount and the shares, a valuation report dated after allotment, missing KYC from the remitting bank, or a wrong entity master record.

Once money for shares is received from a non-resident, the company must issue the shares within 60 days. If it cannot, it must return the money within 15 days after the 60 days end. Money kept beyond that without allotment or refund is a contravention. Founders often miss this part of FEMA compliance when funds arrive before the board and shareholder approvals are ready, so we check the calendar before the investor sends money.

Every Indian company and LLP that has received foreign investment, or made an overseas investment, in the previous year or earlier years and still holds it, must file the annual return on foreign liabilities and assets (the FLA return) by 15 July each year. The return is filed even if no new investment came in during the year. Many companies forget it in the years after a funding round, and it is the most common FEMA compliance gap we see in due diligence.

The return uses audited figures where available, or unaudited figures with a revised return after the audit. The Reserve Bank has been moving statistical returns and surveys to CIMS; which portal the FLA return uses in a given year is stated in that year's instructions, and we check it every time.

CIMS (RBI) – the Centralised Information Management System – is the Reserve Bank's platform for collecting regulatory returns and statistical surveys. It replaces older ways of submitting data, such as emailed spreadsheets, with web forms that check the data before it is accepted. Banks, NBFCs, payment system operators and other regulated entities file many of their returns on CIMS.

For businesses that are not regulated entities, CIMS matters because some external sector surveys and reports have started moving there. In the 2025-26 cycle, certain surveys used for India's balance of payments statistics began moving to CIMS, and in 2026 the Reserve Bank moved reporting of certain guarantees to CIMS. When a company is asked to file a return on CIMS, it needs a registered user, the right return in its list and data that matches its audited accounts.

• Register the reporting user and confirm the returns assigned
• Prepare the data from audited or reconciled books
• Check the validation messages before submission
• Keep the acknowledgement and the working file for audit

The RBI PRAVAAH portal – Platform for Regulatory Application, Validation and Authorisation – is the Reserve Bank's single online system for applications seeking a licence, authorisation or regulatory approval. It was launched in 2024, and from 1 May 2025 the Reserve Bank asked applicants to use it for the applications listed on it, with over a hundred application forms available.

For FEMA compliance, PRAVAAH is mostly used for applications that need the Reserve Bank's approval, including compounding applications, which may be made online through PRAVAAH. Under the 2026 export and import regulations, AD banks also route certain approval requests through PRAVAAH. The applicant receives a reference number and can track queries and the decision online.

Overseas investment is governed by the Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022 and the related directions. An Indian entity can make overseas direct investment in a foreign entity engaged in a bona fide business activity, within the financial commitment limit linked to its net worth, through its AD bank. Resident individuals can invest abroad within the Liberalised Remittance Scheme limit, subject to conditions such as not acquiring control in a foreign entity that has its own subsidiaries in certain cases.

• Report the investment through the AD bank within the time allowed
• File the annual performance report for each foreign entity by 31 December each year, based on its accounts
• Report disinvestment, restructuring and changes in shareholding
• Avoid structures where a foreign entity invests back into India in a way the rules prohibit
• Keep evidence of the business activity and the valuation used

Delays in overseas investment reporting – a frequent FEMA compliance gap for groups with foreign subsidiaries – can be regularised by a late submission fee in many cases, but the AD bank may not allow further overseas investment until the pending reports are filed.

An Indian company that borrows from a foreign lender, including its own foreign parent, must follow the external commercial borrowing framework: eligible borrower, recognised lender, permitted end-use, minimum maturity and an all-in cost within the ceiling. Before drawdown, the AD bank obtains a loan registration number from the Reserve Bank, and the borrower files a monthly return. The borrowing and lending regulations were amended in February 2026 and the forms were revised, so older templates should not be reused.

The end-use list matters most. Loans for real estate activity, investment in capital markets and on-lending for these purposes are restricted, with specific exceptions. A loan used for a prohibited purpose is a contravention even if every form was filed on time, so FEMA compliance for borrowers starts with the end-use.

Exporters must realise and repatriate export proceeds within the period allowed, and importers must pay within the time permitted. Banks track these through their export and import data systems, and pending entries lead to caution listing or questions on later transactions. The 2026 export and import regulations simplified several requirements and set a uniform period for realisation, so we check older outstanding entries against the new rules.

Outward remittances for services, royalty, interest or dividends need the tax documents – Form 15CA and, where required, a chartered accountant's certificate in Form 15CB – before the bank will remit. Inward remittances for exports of services should carry the correct purpose code so that the bank's records match the business.

The RBI IFSC code is the Indian Financial System Code: an 11-character code that identifies a bank branch taking part in NEFT, RTGS and IMPS. The first four characters are letters that identify the bank, the fifth is zero, and the last six identify the branch. The Reserve Bank publishes the list of IFSCs on its website, and every bank prints its IFSC on cheque books and account statements.

For FEMA compliance, the IFSC is used for domestic transfers – for example when an NRO account receives rent, or money moves between Indian accounts. A foreign investor sending money from abroad uses the SWIFT code of the receiving bank, not the IFSC. Mixing the two is a common reason for delayed credit and for KYC requests that hold up an FDI allotment. Always take the code from the bank's own statement or the Reserve Bank's list, never from a message or a website you do not trust.

The RBI CMS portal (cms.rbi.org.in) is the Reserve Bank's Complaint Management System, used to file complaints against banks, NBFCs, payment system participants and other regulated entities under the Reserve Bank's ombudsman scheme. The Reserve Bank notified a new Reserve Bank – Integrated Ombudsman Scheme, 2026, effective from 1 July 2026, replacing the 2021 scheme for new complaints.

Before using the portal, a customer must first complain to the bank or NBFC and wait for its reply, generally for 30 days. The ombudsman deals with deficiency in service – for example a bank delaying the credit of an inward remittance without reason, or charging in breach of the Reserve Bank's rules. It does not decide FEMA compliance questions or contraventions, tax matters or disputes that belong in court. For a business, the most useful step is a clear written complaint to the bank with dates, transaction references and the documents already given.

• Complain to the bank or NBFC first and keep the reference number
• Wait for its reply or the period allowed
• File on the CMS portal with the reply and supporting documents
• Track the complaint online and respond to queries

People searching for the RBI governor 2025 are usually looking for one name. RBI Governor Sanjay Malhotra is the 26th Governor of the Reserve Bank of India. He took charge on 11 December 2024 for a term of three years, succeeding Shaktikanta Das. Before joining the central bank, he was Revenue Secretary in the Ministry of Finance; he is a 1990-batch officer of the Indian Administrative Service from the Rajasthan cadre.

Sanjay Malhotra (RBI Governor) chairs the Monetary Policy Committee and the central board, and the regulations and directions under FEMA are issued under the Reserve Bank's authority while he leads it. For a business, the practical point is not who signs the policy but what changed: since 2025 the Reserve Bank has rewritten several FEMA regulations, moved applications to PRAVAAH and returns to CIMS, and issued new rules on borrowing, guarantees, exports and imports. We track these changes so your FEMA compliance follows the version in force.

Under the Reserve Bank's scale-based regulation, NBFCs are placed in layers – base, middle and upper – with stricter rules for larger and more interconnected lenders. The RBI NBFC upper layer list is published each year. The list for 2026-27, released in a press release on 6 August 2026, named 17 NBFCs, including REC, Power Finance Corporation, IRFC, Bajaj Finance, Shriram Finance, LIC Housing Finance, Cholamandalam Investment and Finance, Tata Capital, Muthoot Finance, Aditya Birla Capital, HUDCO, Mahindra & Mahindra Financial Services, L&T Finance, Bajaj Housing Finance, HDB Financial Services and Piramal Finance, with Tata Sons included without prejudice to its application for de-registration.

An NBFC in the upper layer must follow enhanced norms for at least five years even if it later falls below the criteria, and must list its shares within three years of being placed there. The Reserve Bank has also consulted on changing the criteria. For our clients, the list matters in three ways: when an NBFC is a lender or investor and its own compliance affects the terms it offers; when a foreign investor plans to invest in a financial services business, which falls under specific FDI conditions; and when a company borrows from an NBFC and needs to understand the lender's reporting needs.

The RBI floating rate bond people ask about is the Floating Rate Savings Bonds, 2020 (Taxable), issued by the Government of India and sold through agency banks. Interest is paid every six months and reset every six months, linked to the interest rate on the National Savings Certificate plus a fixed spread. The interest is taxable and there is no cumulative option. The bond has a seven-year term, with premature redemption allowed only for specified senior citizens after a minimum period.

The bond is open to resident individuals and Hindu Undivided Families. NRIs are not eligible to invest. This is a common question from NRI clients who plan to return to India, or residents who plan to move abroad; anyone whose residential status changes should check with the agency bank how an existing holding will be treated. We do not sell bonds or advise on investments; we explain the FEMA compliance and tax position so that you can decide with your bank or adviser.

When a FEMA compliance report is filed late, the first question is whether the delay can be regularised by paying a late submission fee (LSF). This applies to specified reporting delays – for example FC-GPR, FC-TRS, LLP forms and certain overseas investment reports – within the period the rules allow. The fee is worked out by formula on the amount and the length of delay, and the AD bank or Reserve Bank tells you the amount; we do not quote third-party charges.

Contraventions that cannot be regularised by LSF – such as allotment beyond 60 days, investment in a sector that needed approval, pricing below fair value or a reporting delay beyond the LSF window – can be compounded under the Foreign Exchange (Compounding Proceedings) Rules, 2024 and the Reserve Bank's directions issued in October 2024. Compounding means admitting the contravention, paying the compounding amount set by the authority and closing the matter without adjudication.

1. List every foreign investment event and match it with the reports filed
2. Identify each delay or breach and the provision involved
3. Decide whether LSF or compounding applies
4. Prepare the compounding application with the chronology, documents and AD bank comments
5. File physically or through PRAVAAH as allowed
6. Answer the Reserve Bank's queries and attend the personal hearing if called
7. Pay the amount within the time allowed and keep the order on record

Compounding is not available in every case, for example where the Enforcement Directorate has started an investigation in certain matters or where the same contravention was compounded within a recent period. In those cases a lawyer should lead, and we support with the financial records.

A foreign company can set up a branch, liaison or project office in India with approval through its AD bank, and in specified cases with the Reserve Bank's approval. A liaison office can only represent the parent and cannot earn income in India. Each office files an annual activity certificate with its accounts, and closing an office needs its own process with the AD bank. Applicants from certain countries, or in specified sectors, need prior approval from the Reserve Bank.

Startups recognised by DPIIT can issue convertible notes to non-residents, subject to a minimum amount in a single tranche, and report them in Form CN. Many startups also grant ESOPs to employees abroad, which must be reported. Foreign investment into a startup also brings yearly FEMA compliance, including the FLA return, and later rounds often involve FC-TRS when early investors sell. Founders who keep a simple FEMA compliance register from the first round save weeks of work at every later round.

1. Short call to understand the transaction, the investor and the timeline
2. List of documents: investor KYC, remittance advice, board and shareholder resolutions, valuation, charter documents
3. Sector and route check, and pricing check
4. Calendar with each due date
5. Preparation and filing of forms, with replies to the AD bank
6. Closing note with acknowledgements and the updated FEMA register

Where there are past gaps, we start with a FEMA compliance health check of all foreign investment since incorporation and give you a written list of what is pending, what can be fixed by LSF, and what needs compounding.

We do not publish fees. The cost depends on the number of transactions and forms, the investor structure, whether valuation is needed, the number of years under review and whether compounding is involved. Our team shares the exact total after reviewing your requirements. Statutory charges such as late submission fees and compounding amounts are set by the authority and paid by you directly.

A Startup Three Years After Its Seed Round

A SaaS startup raised seed money from a US investor and filed FC-GPR on time, but never filed the FLA return. During due diligence for its Series A, the investor's lawyers flagged three missing returns. We prepared the returns, regularised the delay and updated the FEMA register before the closing date.

A Family Company With an NRI Shareholder

An NRI bought shares from his brother in a family company, paying from his NRE account. Nobody filed FC-TRS. The delay was within the late submission window, so we filed the form with a valuation report and the fee calculated by the bank, without compounding.

An Exporter With an Overseas Subsidiary

A manufacturer set up a subsidiary in Dubai but did not file annual performance reports. The bank stopped further remittances to the subsidiary. We prepared the pending reports from the subsidiary's accounts and worked with the bank to clear the backlog.

• Allotting shares after the 60-day window or keeping share money without refund
• Valuation report dated after the allotment
• Treating an NRI investment as domestic without checking repatriation basis
• Not filing the FLA return in years with no new investment
• Missing FC-TRS on a secondary sale between family members
• Ignoring neighbouring-country beneficial ownership
• Using an old form template after the rules change
• Remitting abroad without Form 15CA where needed
• Using a foreign loan for a restricted end-use

Investment Through Rights or Bonus Issues

Rights and bonus shares to non-residents are reported like other issues, and the pricing and sector conditions still apply.

Swap of Shares

Where shares of an Indian company are swapped for shares of a foreign company, both FDI and overseas investment rules apply, with valuation on each side.

Deferred Consideration

Up to a quarter of the price for a transfer can be deferred, held in escrow or indemnified for a limited period, subject to the conditions in the rules.

Conversion of Loans or Dues Into Equity

Converting a foreign loan, import payable or pre-incorporation expenses into shares is allowed in specified cases, with pricing and reporting.

Returning NRIs

A returning NRI's foreign investments, accounts and assets have separate rules once residential status changes; we plan these with the tax position.

• We are not an authorised dealer bank and do not approve forms
• We do not represent you before the Enforcement Directorate or in court; a lawyer should do that
• We do not route money through informal channels or split remittances to avoid limits
• We do not backdate valuation reports or board papers
• We do not sell bonds, investment products or loans
• We do not quote the authority's charges or penalties as our fees

Not every business needs outside help with FEMA compliance. If your company has one foreign shareholder, filed FC-GPR on time, files the FLA return every July and has no transfers or borrowings, your company secretary may already have this covered. If you only need the tax certificate for a foreign remittance, our Form 15CA/15CB service is enough. And if you are an individual sending money abroad within the Liberalised Remittance Scheme for personal purposes, your bank handles the process.

1. Who is the investor, and who are its beneficial owners?
2. What does the business actually do, and is the sector permitted?
3. Is the instrument equity, compulsorily convertible preference shares or debentures, or convertible notes?
4. What is the fair value, and when will the valuation be dated?
5. When will money arrive, and can shares be allotted within 60 days?
6. Who will file FC-GPR and the FLA return?
7. Are there past FEMA gaps to fix first?

FEMA compliance work involves cap tables, investor terms and valuations. As chartered accountants we follow ICAI's confidentiality rules. Access is limited to named team members, and documents are shared only with your AD bank and advisers with your approval.

Use this list to review FEMA compliance before and after every foreign investment.

• Sector, route and cap checked
• Neighbouring-country ownership checked
• Valuation report dated before the issue or transfer
• Inward remittance and KYC received
• Shares allotted within 60 days
• FC-GPR or FC-TRS filed on the FIRMS portal on time
• FLA return filed by 15 July every year
• Overseas investment reports and annual performance reports filed
• ECB returns filed monthly
• FEMA register updated

Our only office is in Whitefield, Bengaluru, where clients can meet us in person. FEMA compliance filings are made online, so we work with companies, LLPs and NRIs in every state and with their AD banks wherever they are. We do not have offices outside Bengaluru.

What is FEMA compliance?

FEMA compliance is following the Foreign Exchange Management Act and its rules for foreign investment, overseas investment, borrowings, trade and remittances, including filing the required reports on time.

What is the RBI FIRMS portal?

It is the Foreign Investment Reporting and Management System, where Indian entities register through the Entity Master Form and file FDI reports such as FC-GPR and FC-TRS through the Single Master Form.

What is the RBI PRAVAAH portal?

It is the Reserve Bank's online portal for applications for licences, authorisations and approvals, including FEMA compounding applications.

What is CIMS (RBI)?

CIMS is the Reserve Bank's Centralised Information Management System for regulatory returns and statistical surveys, with built-in validation.

What is the RBI CMS portal?

It is the Complaint Management System at cms.rbi.org.in, where customers file complaints against banks, NBFCs and payment system participants after first complaining to the entity.

Who is the RBI governor 2025?

Sanjay Malhotra was the RBI governor through 2025 and continues in 2026. He took charge on 11 December 2024 as the 26th Governor.

Who is RBI Governor Sanjay Malhotra?

He is a 1990-batch IAS officer of the Rajasthan cadre and a former Revenue Secretary, appointed for three years from 11 December 2024.

Where do I find the RBI IFSC code for a branch?

On your cheque book, account statement or the bank's website, and in the list the Reserve Bank publishes. Foreign remitters need the SWIFT code instead.

What is the RBI NBFC upper layer list?

It is the annual list of NBFCs placed in the upper layer of scale-based regulation. The 2026-27 list, released on 6 August 2026, named 17 NBFCs.

Can NRIs invest in the RBI floating rate bond?

No. The Floating Rate Savings Bonds, 2020 (Taxable) are open to resident individuals and HUFs only.

When must FC-GPR be filed?

Within 30 days of issuing capital instruments to a person resident outside India.

What is the FLA return and its due date?

It is the annual return on foreign liabilities and assets, due by 15 July each year for entities holding FDI or overseas investment.

What happens if shares are not allotted within 60 days?

The money must be refunded within 15 days after the 60 days end. Failing both is a contravention that may need compounding.

Can a late FEMA compliance filing be fixed?

Often yes, through a late submission fee within the allowed period, or through compounding for other contraventions.

Is FDI from neighbouring countries allowed?

Only under the government route, including where the beneficial owner is from a country sharing a land border with India.

How much does FEMA compliance cost?

We do not publish fees. The cost depends on the transactions, forms, valuation and years under review, and our team shares the exact total after reviewing your requirements.

Form 15CA and 15CB · NRI Taxation · Transfer Pricing · Business Valuation · Startup India Registration · Annual ROC Compliance

To start FEMA compliance work, share the investor details, the transaction, the dates of remittance and allotment, and the forms already filed. Our team will check the position and give you a calendar of what is due.

Contact Details

Office Address

IMAK Advisory, ITPL Main Rd, Pattandur Agrahara, Whitefield, Bengaluru, Karnataka 560066, India

Phone

+91 79798 50684 (call or WhatsApp)

Email

imakadvisoryteam@gmail.com

Sources: Foreign Exchange Management Act, 1999; FEM (Non-debt Instruments) Rules, 2019; Master Direction – Foreign Investment in India; Master Direction – Reporting under FEMA; Foreign Exchange (Compounding Proceedings) Rules, 2024; FEM (Overseas Investment) Rules and Regulations, 2022; Reserve Bank press releases on PRAVAAH, the NBFC upper layer list (6 August 2026) and the Integrated Ombudsman Scheme, 2026. Checked 2 November 2026.