Enforcement Directorate (ED) has issued show-cause notices to Citibank, HSBC Bank, and Deutsche Bank

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The Enforcement Directorate (ED) has issued show-cause notices to Xiaomi Technology India Private Limited, its former Managing Director Manu Kumar Jain, its Director and Chief Financial Officer Sameer B Rao, and three banks: Citibank, HSBC Bank, and Deutsche Bank AG. The notices were issued under Section 16 of the Foreign Exchange Management Act (FEMA) for alleged illegal remittances to the tune of ₹5,551.27 crore.

The ED had earlier seized ₹5,551.27 crore of Xiaomi Technology India Pvt Ltd lying in its bank accounts under the provisions of FEMA. The agency alleged that Xiaomi had remitted foreign currency equivalent to ₹5,551.27 crore to three foreign-based entities, including one Xiaomi group entity, in the guise of royalty. The ED also alleged that Xiaomi had created a documentary façade amongst the group entities.

The ED has asked Xiaomi, Jain, Rao, and the three banks to appear before the Adjudicating Authority of the ED and explain why the alleged illegal remittances should not be declared as a violation of FEMA.

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Xiaomi has denied any wrongdoing and said that it is “committed to following all Indian laws and regulations.” The company has said that it will “cooperate fully with the authorities” and “clear its name.”

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