Hyderabad: Apollo Hospitals FEMA violations case reached closure after the Reserve Bank of India (RBI) issued a compounding order and imposed a one-time payment of Rs 17.77 crore on Apollo Hospitals Enterprises Limited. The order, issued on Wednesday, also directed five company directors and officers to pay Rs 18 lakh each. As a result, the adjudication proceedings under the Foreign Exchange Management Act (FEMA) stand terminated.
The action covered Apollo Hospitals Executive Vice Chairperson Preetha Reddy, Managing Director Suneetha Reddy, S.K. Venkatraman, Akhileswaran Krishnan and S.M. Krishnan. The RBI issued the order after the Enforcement Directorate (ED) granted a no-objection clearance in the matter.
Earlier, the ED launched an investigation after receiving credible information regarding alleged FEMA violations. After completing the probe, the agency filed a complaint before the Adjudicating Authority under FEMA.
The company subsequently approached the RBI seeking compounding of the contraventions under Section 15 of FEMA. The provision allows individuals and companies to admit violations, pay prescribed penalties and regularise breaches without prolonged litigation.
Apollo Hospitals FEMA violations involved foreign investment breaches
Meanwhile, the ED informed the RBI that it had no objection to the compounding proposal. The RBI then approved the application and settled the contraventions based on that clearance.
According to the findings, the case involved receipt of foreign direct investment in retail trading, a sector where such investment was prohibited. The amount involved in that contravention stood at Rs 859.88 crore.
In addition, the complaint cited the issuance of Foreign Currency Convertible Bonds (FCCBs) worth Rs 70.02 crore in violation of FEMA provisions. Authorities also examined foreign investments received under the Foreign Institutional Investor-Portfolio Investment Scheme route.
The company received investments amounting to Rs 623.88 crore under that route. Consequently, the aggregate foreign holding exceeded the permitted 24 per cent paid-up capital limit.
Further, authorities found that foreign shareholding crossed the overall sectoral cap of 51 per cent prescribed for multi-brand retail trading. The amount linked to that contravention was pegged at Rs 870.67 crore.
The Apollo Hospitals FEMA violations case also included findings related to prohibited foreign investment and breaches of prescribed foreign shareholding limits. With the compounding order now in effect, the adjudication proceedings against the company stand terminated.