Did RBI Issue a Compounding Order for FEMA Violations by Nearbuy India Pvt. Ltd?
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Synopsis
In a significant development, the RBI has issued a compounding order under FEMA for Nearbuy India Pvt. Ltd's violations, resulting in the termination of proceedings. This decision underscores the regulatory framework's impact on companies and their compliance obligations.
Key Takeaways
- The RBI has issued a compounding order under FEMA.
- Nearbuy India Pvt. Ltd. faced violations for late reporting.
- The order led to the termination of legal proceedings against the company.
- A one-time payment of Rs. 4,28,297 was made for compliance.
- This highlights the importance of adherence to financial regulations.
New Delhi, Dec 19 (NationPress) The Reserve Bank of India (RBI) has enacted a compounding order under Section 15 of the Foreign Exchange Management Act, 1999 (FEMA) concerning Nearbuy India Private Limited. This action has led to the cessation of proceedings against the company for purported infringements of the act, as reported by the Directorate of Enforcement (ED) on Friday.
The RBI's order was finalized on October 17 following a “No Objection” from the ED, according to the agency's statement.
In this instance, the ED initiated an investigation based on credible information under FEMA. Upon concluding the inquiry, the agency lodged a complaint under FEMA before the Adjudicating Authority on December 3, 2024. This complaint highlighted violations of FEMA, including delays in reporting foreign inward payments under Para 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, amounting to Rs. 35.82 crore, and late submission of Form FCGPR after shares were issued under Para 9(1)(B) of the same schedule, totaling Rs. 73.01 crore.
The RBI has now compounded these violations, as mentioned in the statement.
Following FEMA provisions, the Adjudicating Authority initiated proceedings by issuing a show cause notice on February 27 under Section 16 of FEMA, directed at the company and its responsible directors and officers during the relevant period of contravention.
Subsequently, the company submitted a request to the RBI for the compounding of these violations as per Section 15 provisions of FEMA.
After receiving a reference from the RBI, the ED provided a “no objection” for the compounding, aligning with the intent of the Act. As a result, the RBI has compounded the violations through a compounding order involving a one-time payment of Rs. 4,28,297.
This decision has led to the conclusion of adjudication proceedings under FEMA, as well as the cessation of further litigation against the company and its officials, the statement added.
Point of View
I firmly believe that the RBI's action against Nearbuy India Pvt. Ltd. signals the need for companies to adhere strictly to compliance standards. Such enforcement actions, while significant, should also serve as a reminder for businesses to maintain transparency and diligence in their operations.
NationPress
20/12/2025
Frequently Asked Questions
What is the Foreign Exchange Management Act (FEMA)?
FEMA is a regulatory framework established in India to facilitate external trade and payments while ensuring the orderly development and maintenance of the foreign exchange market.
What does a compounding order imply?
A compounding order allows a company to settle violations by paying a predetermined amount, thus avoiding further legal proceedings.
What were the specific violations by Nearbuy India Pvt. Ltd.?
The company faced violations for late reporting of foreign inward payments and the late filing of necessary forms after issuing shares.
Why did the RBI issue this order?
The RBI issued this order to enforce compliance with FEMA regulations and terminate ongoing legal proceedings against the company.
What is the significance of the ED's 'no objection'?
The ED's 'no objection' is crucial as it permits the RBI to proceed with the compounding order, reflecting cooperative regulatory enforcement.
