Enforcement Directorate Investigates Bengaluru Firm for Foreign Exchange Violations

Investigation Launched Against One Sigma Technologies

New Delhi: The Enforcement Directorate (ED) announced on Wednesday that it has initiated a case concerning foreign exchange violations against One Sigma Technologies Pvt. Ltd., a Bengaluru-based firm that provides credit payment services via its mobile application, SIMPL. The alleged violations amount to over ₹913 crore.

The investigation targets the company's director, Nithya Nand Sharma, and focuses on the firm's operations, which include a 'Buy Now Pay Later' service allowing customers to make payments in installments.

According to the ED, One Sigma Technologies received foreign direct investment (FDI) through the automatic route and issued convertible notes without the necessary prior approval from the Government of India, violating the Foreign Exchange Management Act (FEMA) provisions.

The agency's probe was prompted by credible information indicating that the company had received a significant amount of FDI from the United States, allegedly breaching policy regulations.

Reports indicate that One Sigma Technologies secured FDI totaling ₹648.87 crore and issued convertible notes worth ₹264.88 crore under the 100% automatic route, misrepresenting its business activities as 'Benefits of Information Technology and other computer service activities.'

However, an examination of the company's business model revealed that it operates within the financial sector. The Reserve Bank of India (RBI) stipulates that FDI in unregulated financial activities must follow a 100% approval route.

For startups requiring government approval for FDI, convertible notes can only be issued with the Central government's consent. The ED noted that One Sigma Technologies issued these notes without obtaining the necessary governmental approval.