RBI imposes ₹2.88 lakh fee on Myntra after it closes its FEMA case after ED nod

A FEMA investigation against Flipkart-backed online fashion-and-lifestyle platform Myntra has been "terminated" following a compounding order issued by the Reserve Bank of India (RBI) based on a "no objection" from the Enforcement Directorate (ED). The RBI issued the order on April 20 in the case of Myntra Designs Private Limited, the ED said in a statement. The central agency had initiated a probe against the e-commerce platform last year for alleged contraventions of the Foreign Exchange Management Act (FEMA), based on "credible" information.

In the regulatory context, a compounding order means an authority formally settling an offence by allowing the defaulter to pay a monetary penalty instead of facing prosecution.

The agency was probing the company for two alleged contraventions of the FEMA covering transactions worth about Rs 46 crore. Myntra, according to the ED, made a one-time payment of Rs 2.88 lakh to get the case compounded or closed.

Compounding is a provision available in the FEMA and the ED has been promoting this provision since last year in the spirit of "ease of doing business" and as a measure to reduce litigation.

"The case was under investigation while the company filed an application before the RBI for compounding of the said contraventions under FEMA as per the provisions of section 15 of the Act.