Nearly half of investigations under FEMA were pending till 2021-22

Issuance of show cause notices as a proportion of investigations has declined in 2018-19

On July 8, the Enforcement Directorate (ED) imposed a penalty of Rs 52 crore on Amnesty India and Rs 10 crore on its former head Aakar Patel.

Until 2021-22 of the 30,716 investigations initiated under the Foreign Exchange Management Act (FEMA) by the ED, only half or 15,495 had been disposed of. Further analysis shows that show cause notices had been issued in a quarter of the investigations.

A show cause notice is issued at the end of an investigation. Based on the issuance of the notice, the adjudicating authority decides on a penalty.

As ED cases under FEMA have risen, so has the pendency. While 5,100 cases were pending investigation by the start of 2016, the count had almost tripled by 2021-22.

A Business Standard analysis found that such instances have gotten rarer as time progressed. Show cause notices issued by the authority as a proportion of investigations initiated have declined over the past few years.

A decline in show cause notices also indicates rising pendency.

In 2016-17, 27 per cent of the notices were issued as a proportion of investigations initiated. The ratio increased to 31.7 per cent in 2018-19 and has since declined. In 2019-20, 718 notices (21.4 per cent) were issued, and the ED initiated 3,360 investigations; the ratio declined to 19.4 per cent in 2020-21. In the previous fiscal year (until December 2021), show cause notices comprised only 6.8 per cent of the new investigations.

Adjudications have declined further. In 2017-18, 868 show cause notices were adjudicated; it has since been in a constant decline. Before the pandemic, in 2019-20, adjudications numbered 574 and were only 156 in the first eight months of 2021-22.

Further analysis shows the number of summons issued and searches conducted under FEMA have also reduced. In 2019-20, 6,838 summons were issued, and 142 searches were conducted. For the first eight months of 2021-22, 3,176 summons were issued by the authority, and 74 searches were conducted under FEMA.