Enforcement Directorate Notice: A significant development has unfolded as the Enforcement Directorate (ED) recently charged on Xiaomi, a prominent Chinese mobile phone manufacturer. Alongside the company, the ED also issued show cause notice to Chief Financial Officer (CFO), Sameer B Rao, as well as the former Managing Director (MD), Manu Kumar Jain. This move comes in light of a foreign exchange law violation case, involving a staggering amount of over Rs 5,551 crore. Not stopping there, the ED has also issued show cause notices to three foreign banks, heightening the intensity of the situation.
Taking action under the appropriate section of the Foreign Exchange Management Act (FEMA), the Financial Investigation Agency has come forth with this crucial information. In their statement released on Friday, they highlighted that the Adjudicating Authority of FEMA has initiated action by dispatching notices under Section 16 of the act. The recipients of these notices include Xiaomi Technology India Private Limited, two of its officers, Citibank, HSBC Bank, and Deutsche Bank AG.
This recent development builds upon a significant step previously taken by the ED. In the wake of concluding the investigation of a FEMA case, a show cause notice is typically issued. The recipient of this notice may face the consequence of paying a fine up to three times the amount of the contravention. Alongside Xiaomi, Jain and Rao have also received this notice. It's worth noting that the ED had previously frozen Rs 5,551.27 crore held in the bank accounts of Xiaomi Technology India Pvt Ltd due to their involvement in illicit remittances.
Moreover, the ED has extended its reach to three foreign banks, including Xiaomi, by serving them with notices. The primary objective is to seek clarification regarding an amount totaling Rs 5,551 crore, allegedly linked to foreign exchange violations. This latest move by the Enforcement Directorate has created quite a stir in the industry.
Expanding on the matter, the Enforcement Directorate has shed further light on the situation. It has come to their attention that Xiaomi India has been transferring funds to its parent company since 2015. Remarkably, during the course of the investigation, it was revealed that Xiaomi India commenced these remittances merely a year after commencing operations in India in 2014. This revelation adds a layer of complexity to the case and raises pertinent questions about the company's financial practices.
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