RBI Compounds FEMA Violations Case Against Myntra Designs
ED Investigation Closed After Settlement
New Delhi: The Reserve Bank of India (RBI) has issued a compounding order under Section 15 of the Foreign Exchange Management Act (FEMA), 1999, in the case of Myntra Designs Private Limited, resulting in the closure of the investigation related to alleged FEMA violations after the company paid the prescribed compounding amount.
According to official information, the RBI passed the compounding order on April 20, 2026, following a “No Objection” from the Directorate of Enforcement (ED). The order pertains to certain procedural and regulatory violations under FEMA that were being examined by the enforcement authorities.
FEMA Contraventions Under Scrutiny
The Enforcement Directorate had initiated an investigation based on credible inputs regarding alleged contraventions of FEMA regulations by Myntra Designs Private Limited. The probe primarily focused on two issues related to overseas investments and reporting requirements.
The first violation involved a delay in submitting Annual Performance Reports (APRs) under Regulation 15(iii) of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004. The delayed reporting related to transactions valued at approximately ₹42.85 crore.
The second violation concerned the undertaking of Overseas Direct Investment (ODI)-related financial commitments before the submission of the required APRs. This alleged contravention fell under Regulation 6(2)(iv) of FEMA 120/RB-2004 and involved an amount of approximately ₹3.03 crore.
Company Sought Compounding Before RBI
While the matter remained under investigation, Myntra approached the RBI seeking compounding of the alleged FEMA violations under the provisions of Section 15 of FEMA, 1999.
Compounding is a legal mechanism that allows entities to voluntarily admit procedural or technical violations and settle them by paying a monetary penalty, thereby avoiding prolonged litigation and enforcement proceedings.
Following the application, the RBI sought comments and clearance from the Enforcement Directorate. After reviewing the case, the ED issued a No Objection Certificate, supporting the compounding process in accordance with the provisions and objectives of FEMA.
RBI Imposes One-Time Settlement Amount
Based on the ED’s no-objection and after examining the facts of the case, the RBI compounded the violations through its order dated April 20, 2026.
As part of the settlement, Myntra Designs Private Limited was directed to make a one-time payment of ₹2.88 lakh. Upon payment of the compounding amount, the matter stood resolved under FEMA provisions, bringing an end to the investigation relating to the identified contraventions.
What Is FEMA Compounding?
FEMA compounding is designed to facilitate compliance and encourage voluntary disclosure of regulatory lapses. It enables companies and individuals to regularize contraventions without facing prolonged adjudication proceedings, provided the violations are not of a serious nature involving criminal intent.
Under the FEMA framework, the RBI is empowered to compound certain contraventions after evaluating the facts and obtaining necessary inputs from enforcement agencies where required.
Significance of the Order
The case highlights the regulatory mechanism available to companies for resolving procedural foreign exchange compliance issues. It also demonstrates coordination between the RBI and the Enforcement Directorate in ensuring that contraventions are addressed within the legal framework while promoting compliance with foreign exchange regulations.
With the issuance of the compounding order and payment of the prescribed amount, the investigation against Myntra Designs Private Limited regarding the identified FEMA violations has formally concluded, according to the official order.
The development underscores the importance of timely regulatory filings and compliance with overseas investment reporting requirements under FEMA, particularly for companies engaged in cross-border financial activities and foreign investments.
