The Reserve Bank of India (RBI) has officially closed its proceedings against Apollo Hospitals Enterprises Ltd and five of its directors after the healthcare major paid a settlement of ₹17.76 crore for alleged violations of the Foreign Exchange Management Act (FEMA).
The Enforcement Directorate (ED) had initiated an investigation based on credible information, leading to a complaint filed under Section 16 of FEMA. Following this, Apollo Hospitals approached the RBI, seeking a compounding of the alleged contraventions under Section 15 of FEMA. After receiving a 'No Objection' certificate from the ED, the central bank issued a compounding order, bringing the matter to a close upon payment.
Details of the Alleged Contraventions
According to the ED, the alleged contraventions stemmed from multiple foreign investment transactions. These included:
- Foreign Direct Investment (FDI) in Prohibited Sector: Apollo Hospitals allegedly received FDI in retail trading, a sector prohibited for such investment, and subsequently received FDI without the necessary government approval. The amount involved in this specific contravention was stated to be ₹859.87 crore.
- FCCB Issuance Violations: The company was also cited for the issuance of Foreign Currency Convertible Bonds (FCCBs) in alleged violation of FEMA regulations, involving an amount of ₹70.02 crore.
- FII-PIS Route Breach: Further allegations included receiving foreign investment under the Foreign Institutional Investor-Portfolio Investment Scheme (FII-PIS) route that reportedly breached the 24% paid-up capital limit, involving ₹623.87 crore.
- Sectoral Cap Breach: The ED also alleged a breach of the overall sectoral cap of 51% prescribed for foreign shareholding in multi-brand retail trading, with an amount of ₹870.66 crore implicated.
The total compounding amount of ₹17,76,80,121 was paid by Apollo Hospitals Enterprises Ltd. Additionally, each of the five directors and officers—Preetha Reddy, Suneetha Reddy, SK Venkatraman, Akhileswaran Krishnan, and SM Krishnan—individually paid ₹18 lakh as compounding charges. With the payment and the issuance of the compounding order, all adjudication proceedings under FEMA against the company and the involved directors and officers are now terminated.