RBI Compounds FEMA Violations by Apollo Hospitals; Company Pays Rs 17.77 Crore Settlement

New Delhi, June 2026 : The Reserve Bank of India (RBI) has issued a compounding order under Section 15 of the Foreign Exchange Management Act (FEMA) in a case involving Apollo Hospitals Enterprise Limited and five of its directors and senior officers, bringing an end to adjudication proceedings related to alleged FEMA violations.

Under the order, Apollo Hospitals has agreed to make a one-time payment of Rs 17.77 crore, while each of the five directors and officers named in the case has been directed to pay Rs 18 lakh. The individuals include Preetha Reddy, Suneetha Reddy, S.K. Venkatraman, Akhileswaran Krishnan, and S.M. Krishnan.

The RBI’s decision follows a “no-objection” clearance issued by the Enforcement Directorate (ED), which had earlier investigated the matter after receiving credible information regarding potential contraventions of FEMA regulations.

Following the completion of its investigation, the ED filed a case before the Adjudicating Authority under FEMA. Subsequently, Apollo Hospitals approached the RBI seeking compounding of the alleged violations in accordance with Section 15 of the Act.

Compounding under FEMA provides a legal mechanism that allows companies or individuals to voluntarily acknowledge regulatory violations, pay a prescribed penalty, and regularise the contraventions without undergoing prolonged litigation or legal proceedings. The process is aimed at ensuring compliance while avoiding lengthy disputes.

After reviewing the matter and receiving the ED’s no-objection certificate, the RBI approved the compounding application and settled the case through the prescribed monetary penalties.

According to the RBI order, one of the major violations involved the receipt of foreign direct investment (FDI) in retail trading, a sector where foreign investment was prohibited under the applicable regulations at the time. The amount involved in this particular contravention was reported to be Rs 859.88 crore.

The complaint also cited the issuance of Foreign Currency Convertible Bonds (FCCBs) worth Rs 70.02 crore in a manner that allegedly violated FEMA provisions.

In addition, Apollo Hospitals was found to have received foreign investment under the Foreign Institutional Investor (FII)-Portfolio Investment Scheme route amounting to Rs 623.88 crore, which resulted in a breach of the permitted 24 per cent paid-up capital limit.

Another key issue related to the company exceeding the overall foreign shareholding cap applicable to the sector. Authorities noted that the company crossed the 51 per cent sectoral limit prescribed for multi-brand retail trading, with the amount involved in the alleged contravention estimated at Rs 870.67 crore.

The RBI’s compounding order effectively closes the regulatory proceedings in the matter, subject to the payment of the stipulated penalties. The development highlights the role of the compounding framework in resolving FEMA-related disputes while ensuring compliance with India’s foreign exchange regulations.

The case also underscores the importance of adherence to sectoral investment caps, FDI norms, and foreign investment regulations, particularly for large corporates operating across multiple business segments. With the settlement now approved, Apollo Hospitals has avoided a prolonged legal process and regularised the identified FEMA violations through the statutory mechanism provided under the law.