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Byju's Founder Faces ED Notice Over Rs 9362 Crore FEMA Violation

Last updated: 23 February 2024


The Enforcement Directorate (ED) has reportedly prolonged its lookout circular (LOC) against Byju Raveendran, the founder of the embattled ed-tech giant Byju's, as part of an ongoing investigation into alleged violations of the Foreign Exchange Management Act (FEMA). This latest development comes as the federal agency intensifies its scrutiny of the firm's financial transactions.

Background 

Initially issued over a year ago, the LOC against Raveendran was recently renewed, with a condition requiring the ED to be informed if he exits the country. Reports suggest that Raveendran is presently believed to be abroad, based on information available to the agency.

Byju s Founder Faces ED Notice Over Rs 9362 Crore FEMA Violation

Alleged Violations and Accusations

The ED has leveled accusations against Think and Learn Pvt Ltd, the parent company of Byju's, asserting that the firm violated India's foreign exchange laws, resulting in potential losses to the exchequer amounting to approximately Rs 9,362 crore. These alleged violations encompass various aspects such as failure to submit import documents, delayed filing of documents related to foreign direct investment (FDI), and failure to realize proceeds of exports.

Investigation Details

The ED's probe, triggered by multiple complaints regarding foreign investments received by Byju's, focuses on the company's purported business practices and overseas financial transactions. According to the agency, Byju's is alleged to have made substantial foreign remittances and investments, potentially contravening provisions of FEMA, 1999, and leading to revenue loss for the Indian government.

Revelations and Company Response

Raids conducted on Byju's premises in April 2023 revealed significant financial transactions, including the receipt of approximately Rs 28,000 crore in foreign direct investment from 2011 to 2023. Additionally, the company allegedly remitted Rs 9,754 crore to various foreign jurisdictions during the same period under the guise of overseas direct investment. Byju's has yet to publicly respond to these allegations.

Company Profile and Growth Trajectory

Established in 2011, Byju's experienced rapid expansion, particularly during the Covid-19 pandemic, owing to increased demand for online education solutions. The company, renowned for its coaching services, also acquired Aakash Educational Services, specializing in medical and engineering entrance exam preparations.

Conclusion

As the ED's investigation into Byju's unfolds, the extension of the lookout circular against its founder underscores the gravity of the allegations and the agency's determination to ensure compliance with forex regulations. The outcome of this probe will likely have significant implications for the future operations and reputation of one of India's leading ed-tech enterprises.

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