The Reserve Bank of India (RBI) has compounded multiple Foreign Exchange Management Act violations involving Apollo Hospitals Enterprise Ltd. and five of its directors and officers after the company and individuals paid a total of nearly Rs 18.67 crore, according to the Enforcement Directorate (ED).
In a statement issued on Tuesday, the ED said the RBI passed the compounding order under Section 15 of FEMA after the agency issued a "No Objection", resulting in the termination of adjudication proceedings against the company for the compounded contraventions.
According to the ED, the case originated from an investigation conducted under FEMA based on credible information received by the agency. Following the probe, the ED filed a complaint under Section 16 of FEMA before the Adjudicating Authority.
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Subsequently, Apollo Hospitals approached the RBI seeking compounding of the alleged contraventions under Section 15 of FEMA. The RBI sought the ED's views on the matter, following which the agency granted a no-objection "in line with the true spirit of the Act", the statement said.
The RBI, thereafter, compounded four FEMA violations involving aggregate transactions worth more than Rs 2,400 crore.
The contraventions included the receipt of foreign direct investment (FDI) in a sector prohibited for FDI, and subsequent receipt of foreign investment without the required government approval. The transaction value involved was approximately Rs 859.88 crore.
The regulator also compounded a violation related to the issuance of Foreign Currency Convertible Bonds (FCCBs), involving around Rs 70.02 crore.
In addition, the company was found to have received foreign investment under the FII-PIS route beyond the prescribed 24% paid-up capital limit, involving about Rs 623.88 crore.
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Another contravention pertained to exceeding the overall foreign shareholding cap of 51% applicable to multi-brand retail trading, involving approximately Rs 870.67 crore.
As part of the settlement, Apollo Hospitals paid a one-time compounding amount of Rs 17.76 crore, while each of the five concerned directors and officers paid Rs 18 lakh.
The officials named in the order are Preetha Reddy, Suneetha Reddy, S.K. Venkatraman, Akhileswaran Krishnan and S.M. Krishnan.
"The contraventions have been compounded with a one-time payment of Rs. 17,76,80,121 by M/s Apollo Hospitals Enterprises Limited and Rs. 18,00,000 each by its concerned Directors/officers," the ED said.
The agency added that the RBI's compounding order has resulted in the closure of adjudication proceedings under FEMA related to the violations and has also brought an end to further litigation arising from the matter.
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