Section 11 FEMA Act 1999: RBI Powers to Issue Directions to Authorised Persons
Section 11 of the Foreign Exchange Management Act, 1999 empowers the Reserve Bank of India to issue compliance directions to authorised persons, require information from them and impose a specified penalty after a reasonable opportunity of being heard for certain failures to comply.
What is an authorised person under FEMA?
Section 2(c) of FEMA defines an "authorised person" as an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under Section 10(1) to deal in foreign exchange or foreign securities. Section 11 therefore operates principally in relation to persons and entities authorised by RBI to conduct regulated foreign exchange business.
Section 11 - Reserve Bank's powers to issue directions to authorised person
11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.
(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit.
(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.
Meaning and scope of Section 11
1. RBI may issue directions for FEMA compliance
Under Section 11(1), RBI may direct authorised persons in relation to payments or the doing, or refraining from doing, an act connected with foreign exchange or foreign security. The statutory purpose of the direction is to secure compliance with FEMA and the subordinate legal framework made under it.
2. RBI may require information
Section 11(2) authorises RBI to require an authorised person to furnish information in the manner specified by RBI. This power supports regulatory supervision and enables RBI to verify compliance with FEMA, rules, regulations, notifications, directions and orders made under the Act.
3. Penalty for breach of direction or failure to file return
Section 11(3) applies where an authorised person contravenes an RBI direction under FEMA or fails to file a return as directed by RBI. Before imposing the statutory penalty, RBI must give the authorised person a reasonable opportunity of being heard.
- The penalty may extend to Rs. 10,000.
- For a continuing contravention, an additional penalty may extend to Rs. 2,000 for every day during which the contravention continues.
How Section 11 relates to Sections 10 and 12
Section 10 deals with RBI authorisation of persons to deal in foreign exchange or foreign securities and specifies duties attached to such authorisation. Section 11 gives RBI express powers to issue directions and demand information from those authorised persons. Section 12 complements these powers by authorising RBI inspection of the business of an authorised person for the purposes stated in that section.
Official legal resources
For the current statutory text and regulatory directions, refer to the official India Code database and the Reserve Bank of India. RBI Master Directions, circulars and notifications should be checked for the particular category of foreign exchange transaction or authorised person involved.
Legal text reviewed against the current India Code version available on 27 September 2026. Regulatory directions may be amended from time to time.