An appellate authority at the Enforcement Directorate (ED) issued the so-called show cause notices under India’s foreign exchange laws for alleged illegal remittances of 55.51 billion rupees ($673.2 million). The funds have been frozen by the agency since last year.

Show cause notices are typically issued to a company to ask it why the federal agency should not proceed to take action against it for wrongdoing.

Xiaomi and the three banks did not respond to requests for comment.

India alleges Xiaomi’s local unit made illegal remittances to foreign entities by passing them off as royalty payments. The Chinese company has previously said those payments were all legitimate and that it will “continue to use all means to protect the reputation and interests”.

The notices were issued to Xiaomi and officials including the chief financial officer of its India unit, the ED said in a statement.

The banks received notices because they allegedly allowed foreign remittances described as royalty payments without conducting due diligence and obtaining necessary documentation, the agency added.

Reuters reported last year Indian investigators had alleged during their probe that Xiaomi misled its banker Deutsche for years by claiming it had an agreement for payment of royalties when it had none.

Court documents show Xiaomi’s frozen assets are spread across accounts at various banks including Deutsche, Citi and HSBC.

The Chinese company is one of India’s leading smartphone players, having grown rapidly in recent years by offering budget smartphones. It competes with Samsung Electronics (005930.KS) and other Chinese brands in the booming South Asian market.

Xiaomi last year told a court that the asset freeze was “severely disproportionate” and had effectively halted its operations in India. In April, an Indian court rejected Xiaomi’s request to lift the freeze

Xiaomi’s assets in India were frozen last year by the federal financial crime agency which alleged the company had made illegal remittances to foreign entities by passing them off as royalty payments.

“We are studying the matter and waiting for the written order,” a Xiaomi spokesperson said regarding the ruling by a court in Karnataka state, adding the company’s operations in India are compliant with local laws and regulations.

The company has previously said its royalty payments were all legitimate and that it will “continue to use all means to protect the reputation and interests”.

Xiaomi has lost its spot as India’s top choice for smartphones to rival Samsung Electronics (005930.KS) as Indian consumers opt for improved features in the world’s second biggest market for the devices.

Chinese companies have also struggled to do business in India since 2020 due to political tensions following a border clash.

India has cited security concerns in banning more than 300 Chinese apps since then, including popular ones such as TikTok, and has tightened rules for Chinese companies investing in India.