The Enforcement Directorate (ED) has issued a notice to Paytm’s owner, One97 Communications Ltd. (OCL), for alleged violations of the Foreign Exchange Management Act (FEMA) involving transactions totaling over ₹611 crore. The case pertains to the acquisition of two subsidiaries, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL).
One97 Communications, which operates under the Paytm brand, informed the Bombay Stock Exchange (BSE) that it received a FEMA violation notice from the ED on February 28, focusing on its subsidiaries, LIPL and NIPL. The notice also includes certain current and former directors and officers of the company. The alleged violations reportedly relate to transactions conducted between 2015 and 2019.
Of the total ₹611.17 crore under scrutiny, ₹344.99 crore is linked to investment transactions involving LIPL, ₹245.20 crore pertains to OCL, and the remaining ₹20.97 crore concerns NIPL.
One97 Communications clarified that the alleged violations occurred during a period when both LIPL and NIPL were not subsidiaries of the company. OCL acquired both entities in 2017.
The company stated that it is addressing the matter in compliance with legal and regulatory requirements. “To resolve this matter in accordance with applicable laws and regulatory processes, the company is seeking legal counsel and evaluating appropriate remedies,” OCL said in its submission.
The company also assured that the development does not impact Paytm’s services for consumers and merchants, and all services remain fully operational.
This development follows regulatory scrutiny of Paytm Payments Bank, which last year denied any foreign exchange rule violations. On January 31, the Reserve Bank of India (RBI) directed Paytm Payments Bank to halt most of its operations starting March 1, 2024, citing “persistent non-compliances and material supervisory concerns.”
