Bengaluru-based fintech startup Simpl has come into the crosshairs of the Reserve Bank of India (RBI). The central bank has asked the Buy Now, Pay Later (BNPL) platform to cease all payment operations “immediately”, according to an Economic Times report.
In a letter dated September 25, 2025, the RBI said that its investigation has revealed that Simpl has been running a payments business involving “payment, clearing and settlement” without authorisation in violation of certain provisions of the Payment and Settlement Systems (PSS) Act, 2007.
“The entity is directed to immediately stop the business of payment systems carried out by involving functions of payment, clearing, and settlement,” the letter reads.
Simpl Faces An Existential Crisis
This is the latest setback for Simpl, which has been facing increased scrutiny from regulators. Earlier in July this year, the Enforcement Directorate (ED) filed a case under the Foreign Exchange Management Act (FEMA), 1999, against Simpl and its cofounder and CEO, Nityanand Sharma, for alleged foreign exchange violations amounting to Rs 913.75 crore.
The probe agency alleged that Simpl, registered under the name One Sigma Technologies Private Limited, received a “substantial” amount of Foreign Direct Investment (FDI) from the US for technology services but routed it for financial services without obtaining prior approval from the Centre.
“Further, it was learnt that M/s One Sigma Technologies Pvt Ltd received FDI to the tune of Rs. 648.87 crore and issued Convertible Notes to the tune of Rs. 264.88 crore under the 100% automatic route by declaring its business activity as Benefits of Information Technology and other computer service activities. During the course of investigation under FEMA, 1999, the business model and revenue generation model of M/s One Sigma Technologies Pvt Ltd were examined, and the same revealed that M/s One Sigma Technologies Pvt Ltd is into the business activities which fall under financial activities,” said the probe agency in a statement.
And the problems don’t end there. Over the past two years, Simpl has executed multiple rounds of layoffs, affecting nearly 200 employees. In May last year, the BNPL fintech company laid off 160-170 employees across various departments, reportedly due to high monthly cash burn and slowing user acquisition.
Founded in 2015 by former Goldman Sachs vice president Nityanand Sharma and Chaitra Chidanand, Simpl is a BNPL (Buy Now, Pay Later) platform that allows customers to settle their bills at e-commerce, food delivery, and quick commerce platforms without making an immediate payment, offering a 15-day interest-free repayment window.
The company claims to have partnered with 26,000 merchants, including Zomato, Swiggy, MakeMyTrip, BigBasket, Tata 1mg, and Crocs.
According to data from Tracxn, the startup has raised a total of $83 million in funding to date. It counts the likes of Green Visor Capital, IA Ventures and Valar Ventures among its backers.
RBI Further Tightens Noose Around Fintech Sector
The crackdown against Simpl comes at a time when the RBI has increased its scrutiny of payment startups in the country by bringing them under its direct supervision. Earlier in September, the central bank issued master directions for payment aggregators, effectively increasing the compliance burden of all categories of payment companies — including cross-border, online and offline.
Advertisements
According to industry experts, BNPL companies are either required to obtain a non-banking finance company (NBFC) licence or forced to act as lending service providers (LSPs) for banks and NBFCs. But Simpl bypassed this system altogether and never pursued an NBFC licence.
What got consumers hooked on companies like Simpl was the flexibility to pay monthly instalments on credit. When credit cards began dominating the finance industry, BNPL companies took it up a notch and began offering “zero-interest” loans to customers.
For example, Simpl users could make purchases on the BNPL platform, which would ask them to pay back the sum in 15 days or even split it into instalments. To be sure, Simpl did not lend money to users directly and instead struck a deal with certain merchants. So, technically, Simpl’s business model was akin to a “Khata” or a dues ledger system. Instead of earning from customers, it pocketed a cut from merchants, similar to how card networks charge merchants for processing payments.
Simpl is not the only fintech startup that has come under the RBI’s scanner in recent times. In January last year, the central bank directed Paytm Payments Bank to halt most of its operations due to “persistent non-compliances and continued material supervisory concerns”. Soon after the order, fintech company Paytm halted its BNPL product Paytm Money in May 2024, citing a broader decline in asset quality across the industry.
However, earlier in September, the company relaunched its BNPL product as a credit line on Unified Payments Interface (UPI) in partnership with Suryodaya Small Finance Bank. The service, which is available to select users, enables instant short-term credit under a scheme titled “Spend Now, Pay Next Month”.
Also read:
Support our journalism:
For You
Source link