The Bangalore team of ED took major action and One Sigma Technologies PVT. Ltd. And a case has been registered against its director Nityanand Sharma under Foreign Exchange Management Act (FEMA). This company is accused of violation of rules worth around 913.75 crores.
ED investigation has revealed that this company has earned a large amount of Foreign Direct Investment (FDI) from the US, which was against the current rules.
What is the rule of this company?
One Sigma Technologies Pvt. Ltd. A mobile app works through SIMPL, which provides customers like Buy Now, Pay Later. That is, customers can buy goods and pay it in installments later.
SIMPL is a Fintech app, which gives users the option to pay immediately instead of payment immediately while shopping. It is especially liked between young and online shopping users.
What is the real business of simpl?
The company had claimed that it is associated with Information Technology and other computer services, on the basis of which it acquired 648.87 crore FDI and 264.88 crore convertible notes. All this was taken under 100% Automatic Route.
The ED investigation made it clear that the real business model of SIMPL is associated with financial activity, but according to the RBI’s 20 October 2016 circular, a sector where there is no regulatory body (eg RBI or SEBI), can only be taken after the FDI GOVERNMENT Approval, i.e. Simpl should only be encouraged from the Government of India. He took FDI without any approval and issued convertible notes.
Complaint lodged under FEMA section
The ED has now filed a complaint against the company under Section 16 (3) of FEMA and the matter has now been sent to adjudicating authority. The company can be processed under Section 13 of FEMA, which provides for both fine or punishment.
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