India’s fintech sector has come under fresh pressure as the Reserve Bank of India (RBI) cracked down on Simpl, a popular buy-now-pay-later startup. The regulator has ordered the Bengaluru-based company to suspend all payment activities, citing violations of payment laws. This marks another setback for the firm, which is already facing investigations from the Enforcement Directorate (ED) and struggling with layoffs.
RBI Action Against Simpl
The Reserve Bank of India (RBI) has directed Bengaluru-based fintech startup Simpl to immediately stop all payment operations. In a letter dated September 25, reviewed by The Economic Times, the central bank said that Simpl was running payment, clearing, and settlement functions without a valid Certificate of Authorisation. This, the RBI stated, violates provisions of the Payment and Settlement Systems (PSS) Act, 2007.
Simpl is known for its buy-now-pay-later (BNPL) model, where customers can shop from partner platforms and repay bills after 15 days without interest. The platform powers payments for leading companies including Zomato, BigBasket, Rapido, MakeMyTrip, 1MG, Crocs, and Box8. According to its website, Simpl works with more than 26,000 merchants.
The RBI’s directive comes at a time when the regulator is tightening its oversight of digital payments and fintech companies. Recently, it also issued new master directions for payment aggregators, expanding compliance rules for online and offline players.
ED Case and FDI Violations
This regulatory setback for Simpl follows another major blow earlier this year. In July, the Enforcement Directorate (ED) filed a case against Simpl and its founder-director, Nithyanand Sharma, under the Foreign Exchange Management Act (FEMA), 1999.
The ED alleged that Simpl, legally registered as One Sigma Technologies Pvt Ltd, diverted foreign investments. The company had reportedly raised funds for technology services but used them in financial services without approvals. The violations are estimated to be worth INR 913.75 crore, breaching India’s foreign direct investment (FDI) rules.
Industry watchers noted that while several BNPL players have secured NBFC (Non-Banking Financial Company) licences or partnered with regulated lenders, Simpl never opted for an NBFC licence. Its cofounder Sharma earlier described Simpl as working like a traditional “khata” or dues ledger used by small shopkeepers in India.
Funding, Layoffs, and Struggles
Simpl was founded in 2016 by former Goldman Sachs vice president Nitya Sharma and Chaitra Chidanand, who left the company in 2020 to start another fintech venture, Salt. Over the years, Simpl has raised around $83 million from investors such as Valar Ventures, IA Ventures, DIA Investments, Hard Yaka, FJ Labs, and Honeycomb Investments. In October 2021, the company raised $40 million in its Series B round led by Valar Ventures and IA Ventures.
However, Simpl has been facing business challenges since 2024. With a slowing pace of user growth and high cash burn, the company conducted two rounds of layoffs, affecting over 200 employees. In May 2024 alone, it cut about 160–170 jobs, including roles in engineering and product teams.
The RBI’s latest move now adds to Simpl’s troubles, raising uncertainty about its future in India’s growing digital payments and BNPL sector.
Anurag Gade
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