The Enforcement Directorate (ED) has filed a complaint against fintech platform Simpl and its director, Nithya Nand Sharma, for financial misconduct amounting to more than Rs. 913 crore, as per an ED press release shared on July 23.
The ED has filed a case under Section 16(3) of the Foreign Exchange Management Act, 1999 (FEMA), and revealed that One Sigma Technologies Pvt Ltd (which operates under the brand name Simpl) received “a substantial amount” of foreign direct investment (FDI) from the US, in violation of the extant FDI policy.
What Has The ED Accused Simpl Of?
As per the ED, Simpl received Rs 648.87 crore in FDI and issued convertible notes worth Rs 264.88 crore, both through the 100% automatic route. The company classified its business activity as “Benefits of Information Technology and other computer service activities” to qualify for this route.
The ED’s investigation found that Simpl’s actual operations fall under “financial activities”, specifically offering buy‑now‑pay‑later (BNPL) services through its app. And as per the Reserve Bank of India’s (RBI) rules, such unregulated financial services revenue models require prior approval from the Government of India. Furthermore, entities engaged in activities that require prior governmental approval cannot issue convertible notes without explicit approval from the Centre.
By misclassifying its business and accepting foreign funds under the 100% automatic route, Simpl allegedly breached FEMA provisions for both FDI receipts and convertible note issuance. The ED has now submitted a complaint to the adjudicating authority, which governs penalty and adjudication proceedings for such violations.
Brief History Of Simpl
Simpl, operated by One Sigma Technologies, is a Bengaluru-based fintech company that offers a BNPL service for consumers making online purchases. The company partners with merchants to allow customers to defer their payments without interest. Customers can aggregate purchases into a single bill, usually payable every fortnight.
Founded in 2015, Simpl has raised multiple rounds of funding from international and domestic investors. The company has reportedly raised over $80 million in funding from US-based entities such as Valar Ventures and IA Ventures in the past. Investments such as these are at the centre of the current ED inquiry.
Financially, Simpl has faced challenges in achieving profitability. According to company filings with the Ministry of Corporate Affairs, Simpl posted a net loss of Rs 356 crore in FY 2023, up from Rs 144 crore in FY 2022. Simpl has not released its earnings data for the 2024-25 financial year.
Why This Matters
The ED’s case against Simpl comes at a time when e-commerce giant Myntra is also facing India’s economic intelligence agency’s heat for alleged overseas funding violations of over Rs 1,654 crore. And the ED’s recent vigil against such financial mismanagement…
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