The Enforcement Directorate (ED) has settled more than 150 cases under the Foreign Exchange Management Act (FEMA) over the past 15 months through the Reserve Bank of India's compounding mechanism.
According to officials, the initiative is intended to reduce prolonged litigation, encourage voluntary compliance and provide faster resolution of eligible FEMA violations through the Reserve Bank of India (RBI) after obtaining the ED's No Objection Certificate (NOC).
Apollo Hospitals Among Major Cases Resolved
One of the notable matters settled recently involved Apollo Hospitals and its directors.
According to available information, the case related to alleged FEMA violations involving approximately ₹850 crore.
As part of the settlement:
- Apollo Hospitals reportedly paid over ₹17 crore
- Each director paid ₹18 lakh
Following payment and completion of the compounding process, the RBI terminated the proceedings.
RBI Has Disposed of 45 Cases This Year
Officials stated that since January 2026, the RBI has disposed of 45 FEMA cases based on No Objection Certificates issued by the Enforcement Directorate.
Among the cases:
- Myntra resolved a matter relating to delayed filing of an Annual Performance Report involving transactions exceeding ₹45 crore after paying a penalty of ₹2.8 lakh.
- Kakinada Seaports Ltd settled its case by paying ₹21.7 lakh.
- Genpact India Pvt Ltd concluded proceedings after paying ₹4.7 lakh.
How the FEMA Compounding Process Works
Under the FEMA compounding framework:
- The concerned individual or company voluntarily applies to the RBI.
- The Enforcement Directorate examines the matter.
- Where appropriate, the ED issues a No Objection Certificate (NOC).
- The applicant pays the prescribed compounding amount.
- After RBI approval, the enforcement or adjudication proceedings are formally closed.
Officials emphasised that only eligible cases qualify for compounding under the statutory framework.
Focus on Compliance Rather Than Litigation
According to the ED, the objective of the revised approach is not limited to imposing penalties but also to encourage regulatory compliance while ensuring timely disposal of pending matters.
Officials believe the framework reduces litigation costs, provides certainty to businesses and enables regulators to focus enforcement resources on more serious violations.
ED Director Rahul Navin stated that the compliance-oriented approach supports India's Ease of Doing Business by providing faster resolution of eligible FEMA matters while maintaining regulatory discipline.
FEMA Matters Centralised at ED Headquarters
To improve efficiency, the Enforcement Directorate has:
- Appointed a Special Director (Adjudication) as the nodal officer for RBI coordination.
- Centralised FEMA and legacy FERA adjudication matters at ED headquarters.
- Streamlined scrutiny and issuance of No Objection Certificates.
The changes are expected to accelerate processing and disposal of pending FEMA cases.
Serious Violations Will Continue to Face Enforcement
Experts note that the FEMA compounding mechanism generally applies where violations are technical or procedural in nature and can be resolved through payment of a monetary penalty.
Cases involving:
- Money laundering
- Wilful violations
- Fraud
- Criminal intent
- Serious foreign exchange offences
will continue to be investigated independently and may not qualify for compounding.
What This Means for Businesses
For Indian companies engaged in overseas investments, cross-border transactions and business setup in dubai, timely FEMA compliance has become increasingly important.
Businesses should maintain complete documentation for:
- Foreign investments
- Overseas subsidiaries
- Annual Performance Reports (APR)
- ODI filings
- RBI reporting
- Cross-border remittances
- Shareholding changes
Maintaining proper compliance records significantly reduces regulatory risk and helps resolve technical violations efficiently where permitted under law.
Conclusion
The settlement of over 150 FEMA cases marks a significant shift towards a more compliance-focused regulatory framework.
While serious financial crimes will continue to face strict enforcement, eligible businesses now have a clearer pathway to resolve procedural FEMA violations through the RBI's statutory compounding mechanism, reducing litigation and improving regulatory certainty.
Shunyatax Global Insight
Cross-border business expansion is increasingly accompanied by complex FEMA reporting obligations. Many regulatory disputes arise not from intentional violations but from delayed filings, incomplete documentation or procedural lapses involving overseas investments and foreign exchange transactions.
Shunyatax Global believes businesses planning international expansion or business setup in dubai should implement proactive FEMA compliance, periodic regulatory reviews and structured documentation management. Early compliance monitoring, timely RBI reporting and regular internal reviews can significantly reduce enforcement exposure while supporting smooth cross-border business operations.