FEMA Violation / ED asks for account of 5551 crores, tightens screws on 3 banks including Xiaomi!

FEMA Violation: ED has issued show cause notices to 3 banks including Xiaomi Technology India, CFO Sameer Rao, former MD Manu Jain in FEMA violation case of Rs 5,551 crore. ED found in its investigation that Xiaomi India started working in India in the year 2014. It is a wholly owned subsidiary of China's leading mobile handset company Xiaomi. Xiaomi India started sending money to its parent company from the year 2015. The company has sent a total of Rs 5,551.27 crore to foreign companies.

ED says notices have also been sent to CITI Bank, HSBC Bank and Deutsche Bank AG in violation of Section 10(4) and 10(5) of FEMA, allowing foreign remittances from the company in the form of royalty abroad Compromised without proper investigation.

Last year, the Federal Investigation Agency had seized Rs 5,551.27 crore belonging to a 'wholly owned subsidiary of China-based Xiaomi Group' lying under the provisions of FEMA. The probe agency said the money was in the bank accounts of the Chinese smartphone giant and was seized in February in connection with alleged 'illegal outward remittances'.

Confirmation of the investigating agency

The investigating agency said that the Appointed Competent Authority appointed under Section 37A of FEMA has confirmed this seizure order. Confirming the seizure, the authority said that the ED's belief is correct that foreign currency equivalent to Rs 5,551 crore was sent outside the country in an unauthorized manner by Xiaomi India. The investigating agency says that it can be confiscated as per the provisions of Section 4 of FEMA, 1999 and Section 37A of FEMA.

After completion of the investigation under FEMA, a show cause notice is issued by the ED. Once the charges are framed, the companies concerned have to pay the fine as per the rules.