RBI’s Directive and ED Probe
The Reserve Bank of India has asked Bengaluru-based fintech Simpl to stop all payment activities with immediate effect, intensifying the startup’s ongoing regulatory troubles. The order comes after the Enforcement Directorate filed a case under the Foreign Exchange Management Act in July against Simpl and its founder-director Nithyanand Sharma.
According to the probe, Simpl, which operates as One Sigma Technologies Pvt Ltd, received foreign investment for technology services but diverted it into financial services without obtaining necessary approvals. The ED has alleged violations amounting to Rs 913.75 crore in foreign exchange rules, raising serious concerns over the company’s compliance with FDI norms.
Company Background and Operations
Founded in 2016, Simpl operates in the buy now pay later segment, offering credit solutions that allow users to make purchases instantly and settle payments later. The company has partnered with over 26,000 merchants, including well-known platforms such as Zomato, MakeMyTrip, BigBasket, 1MG and Crocs.
Simpl rose to prominence during the boom in fintech adoption and secured $40 million in Series B funding in 2021 from global investors like Valar Ventures and IA Ventures. However, the company’s growth momentum has slowed in recent years as the BNPL sector faced tightening regulations and funding challenges.
Struggles Before the Regulatory Clampdown
Even before the RBI’s directive, Simpl had been grappling with financial and operational difficulties. Since 2024, the company has undergone multiple rounds of layoffs, cutting over 200 jobs across roles and departments. In May 2024, it let go of nearly 170 employees, particularly from high-cost functions like product and engineering.
Rising cash burn, slowing user acquisition, and tougher market conditions have made it difficult for the company to sustain its growth trajectory. With the RBI’s suspension of payment operations, its future now appears even more uncertain.
What This Means for India’s Fintech Sector
The crackdown on Simpl highlights the increasing scrutiny on India’s fintech industry, particularly in areas involving foreign investments and compliance with regulatory frameworks. While the sector continues to be a major driver of digital payments and financial inclusion, authorities are making it clear that adherence to rules cannot be compromised.
For Simpl, the road ahead will depend on how it resolves regulatory issues and whether it can regain trust among customers, merchants, and investors.
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