Apollo Hospitals, directors get relief as RBI compounds FEMA violations

Apollo Hospitals Enterprises Ltd and five of its directors have settled a foreign exchange rules violation case after the Reserve Bank of India (RBI) issued a compounding order under FEMA, bringing regulatory proceedings against them to a close.The settlement follows alleged contraventions related to foreign investment and shareholding regulations. The order covers Apollo Hospitals Enterprises and its directors and officers — Preetha Reddy, Suneetha Reddy, S.K. Venkatraman, Akhileswaran Krishnan and S.M. Krishnan.

According to a press release issued by the Directorate of Enforcement (ED), the RBI passed the compounding order after the agency issued a “No Objection” in the matter. The action has led to the termination of adjudication proceedings relating to the FEMA violations covered under the order.
The violations pertained to multiple foreign investment-related provisions under FEMA, including the receipt of foreign direct investment (FDI) in a sector prohibited for FDI, issuance of Foreign Currency Convertible Bonds (FCCBs), downstream investment in an entity receiving foreign investment under the FII/FPI route, and a breach of the applicable sectoral foreign shareholding limit.The RBI imposed a one-time compounding fee of ₹17.8 crore, comprising ₹17 crore on Apollo Hospitals Enterprises and ₹19 lakh each on the five concerned directors and officers.

The ED said the matter has now been settled upon payment of the compounding amount, bringing to a close the adjudication proceedings against the company and its officials for the violations covered under the order.

The central bank’s action was taken under the provisions of FEMA, 1999, and relates only to the contraventions that were compounded through the settlement.