Xiaomi And Banks Face Show-Cause Notices Over Mammoth ₹5,551 Crore Forex Violation

The Enforcement Directorate (ED) has issued show-cause notices to top executives of the Chinese mobile manufacturer, Xiaomi, and three banks over alleged foreign exchange violations amounting to ₹5,551 crore.

What Happened? In a report from PTI, Xiaomi Technology India Private Limited, CFO Sameer Rao, former MD Manu Kumar Jain, CITI Bank, HSBC Bank, and Deutsche Bank AG received the notices.

The ED stated that the adjudicating authority sent the notices based on a complaint filed by the ED regarding illegal remittances by Xiaomi totalling ₹5,551 crore. The ED had previously seized this amount from Xiaomi’s bank accounts due to “unauthorised” foreign remittances disguised as royalties.

See also: India’s Top Brokerages Under Fire From Key Regulators In Major Money Laundering Probe

According to the authority, the ED was correct in asserting that Xiaomi India had transferred foreign exchange equivalent to ₹5,551 crore out of India without authorization.

The Legal Breakdown: The amount, which contravenes section 4 of the Foreign Exchange Management Act (FEMA) 1999, remains held outside India on behalf of the group entity, making it subject to seizure under section 37A of the FEMA.

After an ED investigation under FEMA concludes, a show-cause notice is issued. Once settled, the accused must pay a penalty. This development follows the April 2023 rejection by the Karnataka High Court of a petition from Xiaomi India challenging an order under FEMA.

Read next: Xiaomi Tunes Into India’s Manufacturing Beat: Set To Produce Wireless Audio Products Locally

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Posted In: NewsLegalTechCiti BankDeutsche BankEDHSBCXiaomi