The decision was taken during the AIFF's executive committee meeting, chaired by president Praful Patel.
The I-League's core committee had earlier banned Mohun Bagan from the I-League for two years for breaching of rules.
"The executive committee, after due deliberation, Mohun Bagan will be continue to play in the current season, but they will lose all the 12 points they have earned so far in the league. They will start with zero points and will have to pay Rs 2 crore as compensation," Patel said here.
"There is a panel provision under which the quantum of damage can be decided by the executive committee," he added.
He said the decision was arrived at keeping in mind the larger interest of the sport, the players fans and all stakeholders involved.
Among other decisions related to the contentious issue, no official from Mohun Bagan will be allowed to represent the club in AIFF or I-League meetings in the current calendar year.
"We have also asked them to provide an undertaking that they will never again breach the rules or get involved in an act of indiscipline," Patel said.
I-League CEO Sunanda Dhar will chart out a revised fixture and Mohun Bagan will be have to pay the fine before their next match.
Club captain Okolie Odafa's case has been referred to the disciplinary committee of the federation.
Patel, however, made it clear that if any club is found to be flouting with the rules in future, there will be no scope for reconsideration.
"This is a first and last in Indian football. The committee does not mean that we found any merit (in Bagan's plea). We have only reduced the quantum of the punishment."
