RBI Asks Simpl To Stop Payment Ops After ED Whip

The Reserve Bank of India (RBI) has reportedly asked Bengaluru-based fintech startup Simpl to immediately stop all payment operations. The company confirmed the development to Inc42 and said it was working on its next move.

In a September 25 letter, the regulator said that the company was running a payments system involving “payment, clearing, and settlement” without holding the required Certificate of Authorisation under the Payment and Settlement Systems (PSS) Act, 2007, the Economic Times reported.

“We received a notice saying that our business falls under the category of a payment system and therefore we cannot operate without a licence. The directive was to stop operations immediately since we don’t have one. The notice came only about an hour ago, so we haven’t had the chance to reach out to them yet,” Simple founder and CEO Nitya Sharma told Inc42.

The RBI diktat came after the Enforcement Directorate (ED) filed a complaint in July against the BNPL platform and Sharma for allegedly violating the foreign direct investment (FDI) norms. ED had accused the startup of contravention to the tune of INR 913.75 Cr under the Foreign Exchange Management Act (FEMA), 1999.

Sharma, however, said that the RBI action was not linked to the ED accusation. At the time, Simpl had claimed to be operating in the field of IT and technology services to raise money.

“As for next steps, our immediate plan is to get on calls, understand the situation better, and wait for clarification from the RBI tomorrow,” Sharma said.

Founded in 2015, Simpl allows users to make purchases from partner merchants and pay later, usually every 15 days. Unlike most BNPL firms, Simpl does not give loans directly but acts more like a digital intermediary for payments. It makes money by charging merchants a fee.

The company claims to have over 7 Mn users and raised more than $83 Mn from investors like Green Visor Capital, IA Ventures and Valar Ventures.

(The story will be updated soon)

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