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ED files complaint against SIMPL for ₹913 crore FDI policy violation
In its statement, the ED said enquiries were initiated based on credible information that One Sigma Technologies Pvt Ltd had received substantial FDI from the United States of America, allegedly in violation of the prevailing FDI norms.
The ED's investigation, conducted under the provisions of the Foreign Exchange Management Act (FEMA), 1999, revealed that One Sigma Technologies Pvt Ltd operates its business through a mobile application named SIMPL.
'It provides Buy Now Pay Later services, which allow customers to buy now and pay later in instalments. Further, it was learnt that One Sigma Technologies Pvt Ltd received FDI worth Rs 648.87 crore and issued convertible notes worth Rs 264.88 crore under the 100 per cent automatic route by declaring its business activity as 'Benefits of Information Technology and other computer service activities,'' the ED stated.
The agency further noted that during the course of its investigation, the business and revenue models of One Sigma Technologies Pvt Ltd were examined and found to fall under financial activities.
However, as per A.P. (DIR Series) Circular No. 8 dated October 20, 2016, issued by the Reserve Bank of India (RBI), FDI in financial activities not regulated by any authority must be brought in under the 100 per cent approval route.
'Further, in activities where government approval is necessary for receiving FDI, any startup company can issue convertible notes only with the approval of the Government of India. However, One Sigma Technologies Pvt Ltd issued convertible notes without obtaining any such approval,' the ED said in its statement.
The agency added that SIMPL had received FDI under the automatic route and issued convertible notes without prior government clearance, in contravention of the applicable regulatory framework.
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