FEMA proceedings against Apollo Hospitals, its directors closed after RBI compounding order
Foreign exchange violation proceedings against Apollo Hospitals Enterprises Ltd and five directors have been closed after an RBI compounding order. The company paid Rs 17.76 crore and the directors paid penalties, bringing FEMA adjudication proceedings and related litigation to an end
Hyderabad: Foreign exchange violation proceedings against Apollo Hospitals Enterprises Ltd and five of its directors have been terminated following a compounding order issued by the Reserve Bank of India (RBI). As part of the settlement, Apollo Hospitals paid a one-time compounding amount of Rs 17.76 crore, while each of the five directors paid Rs 18 lakh.
A compounding order allows the settlement of regulatory violations through the payment of a monetary penalty instead of prolonged adjudication or prosecution.
According to the Enforcement Directorate (ED) on Wednesday, the case involved alleged contraventions under the Foreign Exchange Management Act (FEMA) amounting to more than Rs 2,424 crore. The violations pertained to foreign direct investment (FDI) in a prohibited sector, receipt of FDI without the requisite government approval, issuance of foreign currency convertible bonds (FCCBs), and breach of the prescribed foreign shareholding cap under the FII-PIS route.
The RBI issued the compounding order under Section 15 of FEMA after receiving a “No Objection” from the ED. The order covers Apollo Hospitals Enterprises Ltd and five directors, including Preetha Reddy, Suneetha Reddy, SK Venkatraman, Akhileswaran Krishnan and SM Krishnan.
The ED said the RBI’s order has resulted in the closure of adjudication proceedings under FEMA and ended further litigation in the matter. The ED has been encouraging the use of FEMA compounding provisions in select cases as part of its efforts to reduce litigation and promote ease of doing business.
