The Enforcement Directorate (ED) has adopted a new approach to expedite the disposal of pending cases under the Foreign Exchange Management Act (FEMA). Over the past 15 months, more than 150 FEMA cases have been settled through the Reserve Bank of India (RBI)’s approval and the ED’s No Objection Certificate (NOC) mechanism. The initiative is aimed at resolving long-pending cases without prolonged litigation while promoting regulatory compliance.
According to sources, several of these matters had remained pending for years. One of the prominent cases closed recently involved Apollo Hospitals and its directors. The case concerned alleged FEMA violations amounting to nearly ₹850 crore. As part of the settlement, the hospital paid more than ₹17 crore, while each of its directors paid ₹18 lakh, following which the RBI terminated the proceedings.
Since January this year, the RBI has disposed of 45 cases on the basis of NOCs issued by the ED. Among them, Myntra settled a long-pending case related to the delayed filing of an Annual Performance Report involving transactions exceeding ₹45 crore by paying a penalty of ₹2.8 lakh. Similarly, Kakinada Seaports Ltd paid ₹21.7 lakh, while Genpact India Pvt Ltd paid ₹4.7 lakh to conclude their FEMA proceedings.
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Under the FEMA compounding mechanism, the concerned party voluntarily applies to the RBI for settlement. The ED examines the matter and issues a No Objection Certificate where appropriate. After the prescribed penalty is paid and the RBI grants approval, the adjudication or enforcement proceedings are formally terminated.
According to the ED, the objective of this framework is not merely punitive action but also to ensure statutory compliance and provide a time-bound resolution in cases that qualify for compounding. The process reduces the burden of prolonged litigation while offering businesses an opportunity to resolve regulatory violations through legal settlement.
ED Director Rahul Navin said that moving away from a purely punitive enforcement model towards a compliance- and facilitation-oriented approach strengthens India’s Ease of Doing Business. He said timely disposal of eligible cases under the statutory framework benefits both investors and businesses while improving regulatory efficiency.
To speed up the process, the ED has designated a Special Director (Adjudication) as the nodal officer for coordination with the RBI. In addition, all adjudication matters under FEMA and the erstwhile Foreign Exchange Regulation Act (FERA) have been centralized at the ED headquarters. The move is expected to accelerate scrutiny, issuance of NOCs, and the final disposal of pending cases.
Experts believe that the FEMA compounding mechanism serves as an effective alternative in cases where there is no serious criminal intent and the violation can be addressed through a monetary penalty. However, they point out that cases involving deliberate violations, money laundering, or other serious offences will continue to face stringent investigation and enforcement action by the ED. Such matters are assessed individually on the basis of the available evidence and applicable legal provisions, and do not automatically qualify for settlement.
