The Enforcement Directorate (ED) has filed a formal complaint under the Foreign Exchange Management Act (FEMA) against Bengaluru-based fintech firm One Sigma Technologies Pvt. Ltd., which operates the Simpl Buy‑Now‑Pay‑Later (BNPL) app. The agency alleges violations totaling ₹913.76 crore in FDI norms. The firm’s director, Nithya Nand Sharma, is also named in the case
What ED Alleges
- FDI of ₹648.87 crore received under the automatic route, and convertible notes worth ₹264.88 crore also issued under automatic route, without prior government approval.
- Simpl categorized its activities under “IT and computer services” to claim automatic route eligibility, but ED found its core operations are in financial services, requiring prior approval
Applicable Regulations
According to RBI circulars and FDI norms:
- Financial activities not regulated by an authority require FDI via the 100% government-approval route.
- Startups issuing convertible notes in sectors requiring approval must first secure clearance
Simpl allegedly failed to meet these requirements, prompting ED to move forward under Section 13 of FEMA
Why This Matters for India’s Fintech Sector
- This marks one of the most significant ED actions against a fintech startup for FDI non-compliance.
- The case underscores emerging regulatory scrutiny for BNPL platforms, especially those blending financial services and tech.
- It sends a signal for startups to classify business activities correctly and comply with government approval requirements when raising foreign capital.
✅ Key Takeaways
- Simpl faces FEMA charges over ₹913.76 crore in alleged FDI violations.
- The error stems from misclassifying its fintech offering under IT services, bypassing required approvals.
- Regulators are tightening oversight over fintechs using complex funding instruments like convertible notes.
