Has the ED Filed a FEMA Complaint Against SIMPL for Rs 913 Crore FDI Violation?
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Synopsis
The Enforcement Directorate is making headlines after filing a complaint against SIMPL for a staggering Rs 913 crore FDI violation. This case may have significant implications for the financial technology sector in India. Read on to discover the details behind this legal action.
Key Takeaways
- ED filed complaint against SIMPL for Rs 913 crore FDI violation.
- Nitya Nand Sharma is the Director of SIMPL.
- SIMPL offers Buy Now Pay Later services through its mobile app.
- Company issued Convertible Notes without government approval.
- Potential legal implications under FEMA.
Bengaluru, July 23 (NationPress) The Enforcement Directorate's Bengaluru Zonal Office has lodged a formal complaint against One Sigma Technologies Pvt Ltd (SIMPL) and its Director Nitya Nand Sharma for violating the Foreign Exchange Management Act (FEMA) with an amount reaching Rs 913 crore (Rs 913,75,88,062), as stated by an official announcement on Wednesday.
The inquiry was triggered by credible evidence suggesting that SIMPL has acquired a significant volume of Foreign Direct Investment (FDI) from the United States, purportedly breaching existing FDI regulations, according to the ED.
The ED's investigation, conducted under FEMA guidelines, disclosed that the company operates via a mobile application named SIMPL, which offers Buy Now Pay Later services, enabling customers to make purchases now and pay later in installments.
Additionally, it was discovered that One Sigma Technologies Pvt Ltd obtained FDI amounting to Rs 648,87,76,480 and issued Convertible Notes worth Rs 264,88,11,582 under the 100 percent automatic route by categorizing its business activities as “Benefits of Information Technology and other computer service activities,” as per the ED.
“Throughout the investigation under FEMA 1999, the business model and revenue generation approach of M/s One Sigma Technologies Pvt Ltd were scrutinized, revealing that the company engages in financial activities,” reported the ED.
“Nonetheless, according to a circular dated October 20, 2016, from the RBI, FDI in financial sectors not overseen by any authority must adhere to the 100 percent approval route. Furthermore, for activities requiring government approval for FDI, startup companies can only issue convertible notes with the government's consent. However, M/s One Sigma Technologies Pvt Ltd issued convertible notes without securing any approval from the government of India,” the ED highlighted.
“M/s One Sigma Technologies Pvt Ltd (SIMPL) has received FDI under the automatic route and issued convertible notes without obtaining prior consent from the government of India, thereby violating the provisions of FEMA, 1999, amounting to Rs 913,75,88,062 and made itself subject to action under section 13 of FEMA, 1999,” the ED concluded.
“In light of the aforementioned, a complaint under section 16 (3) of FEMA, 1999 has been submitted to the Adjudicating Authority under FEMA,” added the ED.
Point of View
Our commitment remains with the nation's interests. The actions taken by the Enforcement Directorate against SIMPL highlight the importance of adhering to financial regulations. This case serves as a reminder for all companies operating in India to ensure compliance with the Foreign Exchange Management Act to maintain the integrity of our financial systems.
NationPress
23/07/2025
Frequently Asked Questions
What is the complaint against SIMPL about?
The Enforcement Directorate has filed a complaint against SIMPL for violating the Foreign Exchange Management Act by improperly receiving Rs 913 crore in Foreign Direct Investment.
Who is Nitya Nand Sharma?
Nitya Nand Sharma is the Director of One Sigma Technologies Pvt Ltd, the parent company of SIMPL.
What does the company SIMPL do?
SIMPL operates a mobile application that offers Buy Now Pay Later services, allowing customers to make purchases and pay in installments.
What are Convertible Notes?
Convertible Notes are financial instruments that companies use to raise funds, which can later be converted into equity.
What could be the consequences for SIMPL?
If found in violation of FEMA, SIMPL could face legal actions and penalties as stipulated under the act.
