RBI has directed Bengaluru-based fintech Simpl (registered as One Sigma Technologies Pvt Ltd) to immediately suspend all payment, clearing, and settlement operations.
The order is grounded in the finding that Simpl was operating as a payment system operator without obtaining the mandatory Certificate of Authorisation under the Payment and Settlement Systems (PSS) Act, 2007.
Under Section 4 of the PSS Act, no entity is permitted to operate a payment system without prior RBI approval.
The RBI’s directive also mandates that Simpl settle any outstanding liabilities to users and merchants through duly verified bank accounts.
Why the RBI Stepped In: Underlying Issues
1. Lack of Authorization under the PSS Act
The central issue is that Simpl’s operations—facilitating payments, clearing, and settlement—fall squarely within the scope of activities that require RBI permission. The firm lacked the required authorisation.
2. ED’s Investigation under FEMA
In July 2025, the Enforcement Directorate (ED) filed a case under the Foreign Exchange Management Act (FEMA), 1999, against Simpl and founder-director Nithya Nand Sharma, alleging foreign exchange violations to the tune of ₹913.75 crore.
The ED claims Simpl had raised foreign investment designated for technology services but diverted it into financial services, in breach of India’s foreign direct investment (FDI) norms.
3. Business Model Without Regulatory Cover
Unlike many BNPL peers that tie up with regulated NBFCs or acquire lending licenses, Simpl positioned itself as a “checkout enabler” rather than a regulated lender. Its approach avoided classifying itself as a financial services entity — but regulators now appear to reject that boundary.
Impact on Simpl, Its Users & the BNPL Ecosystem
Disruption to Core Operations
The RBI order effectively halts Simpl’s central business functions. Users will be unable to complete transactions via Simpl, and merchants dependent on its checkout infrastructure will face interruptions.
Liability Settlement Risk
Simpl must now reconcile and settle outstanding dues to merchants and users in compliance with the directive. Any delays or failures may invite further regulatory action.
Investor & Market Confidence Hit
Simpl has raised roughly $83 million to date, with a $40 million Series B round led by Valar Ventures and IA Ventures. Business Today The regulatory turbulence could scare off further funding or trigger exit pressures.
Precedent for Other BNPL / Fintech Players
RBI’s intervention sends a strong signal to fintechs operating in ambiguous regulatory zones. Compliance with payment laws and licensing norms will likely be central to survival.
What Simpl Must Do Now
- Apply for the Certificate of Authorisation under PSS Act, if eligible.
- Reassess Business Model to align with regulated frameworks (e.g., tie-ups with NBFCs, adopting a supervised structure).
- Communicate Clearly with users & merchants about service disruption and settlement timelines.
- Cooperate with ED & RBI investigators to resolve outstanding compliance issues.
- Seek legal and regulatory counsel to navigate the dual investigations and safeguard business continuity.
Wider Implications: Regulation Tightens in India’s Fintech Era
- Regulatory Clarity Growing: The RBI’s move hints at a stricter regulatory posture for fintechs, especially those in payments, credit, and settlement.
- End of “Grey Zone” Models: Companies operating in borderline areas without safeguards may no longer find safe harbor.
- Risk for Consumers: Service disruptions from such enforcement actions may adversely affect user trust in BNPL.
- Opportunity for Compliant Players: Fintechs with proper licenses, strong compliance cultures, or banking foundations may gain in reputation and market share.
Conclusion
The RBI’s directive to halt Simpl’s payment services marks a watershed moment in India’s fintech regulation. It underscores that convenience must be built on compliance, not regulatory loopholes.
For Simpl, the road ahead involves restructuring, regulatory rehabilitation, and ensuring stakeholder trust. For the Indian fintech landscape, this could be a turning point — one that redefines how BNPL and payments startups navigate law, risk, and growth.
