The Reserve Bank of India (RBI) has taken action against M/s Myntra Designs Private Limited under the Foreign Exchange Management Act, 1999. The compounding order issued by the RBI has led to the closure of an investigation into alleged FEMA violations by the company, with a penalty of Rs 2.88 lakh. This decision followed the Directorate of Enforcement’s approval.
Section 15 of FEMA allows individuals or entities to confess to violating regulations, pay fines, and rectify the breaches without facing prolonged legal procedures. The ED initiated an inquiry into Myntra Designs for non-compliance with FEMA rules, including delays in submitting annual performance reports and undertaking financial commitments without proper approvals.
The company had failed to submit mandatory Annual Performance Reports (APRs) as required by FEMA guidelines for Overseas Direct Investment (ODI). APRs are essential for Indian residents or entities with ODI to report the financial status of foreign ventures to the RBI. Despite the ongoing investigation, Myntra Designs sought compounding of the violations under Section 15 of FEMA, which was granted after the ED’s no objection.
The RBI, upon receiving the ED’s clearance, compounded the contraventions on April 20, imposing a one-time penalty of Rs 2.88 lakh. This resolution highlights the importance of adherence to FEMA regulations and the significance of timely compliance with reporting requirements for foreign investments.
