NEW DELHI, Mar 3:
On Monday, the Enforcement Directorate announced that it has issued a notice to Paytm’s parent company, its Managing Director (MD), and associated entities for violating the Foreign Exchange Management Act (FEMA) involving an amount of ₹611 crore. As noted in Paytm’s annual report for the financial year 2024, Vijay Shekhar Sharma serves as the chairman, MD, and CEO of the fintech firm.
The notice was issued by a special director within the federal agency after completing an investigation, prior to initiating adjudication proceedings under the applicable law.
A spokesperson for Paytm stated that the company is actively working to resolve the issue in compliance with relevant laws and regulatory frameworks.
The show cause notice has been directed at Paytm’s flagship company, One 97 Communication Limited (OCL), its MD, and various Paytm subsidiaries including Little Internet Pvt Ltd and Nearbuy India Pvt Ltd, citing violations of FEMA provisions totaling approximately ₹611 crore, according to an ED statement.
Investigations revealed that OCL made foreign investments in Singapore without providing the necessary reports to the Reserve Bank of India (RBI) concerning the establishment of an overseas subsidiary. Furthermore, it allegedly received foreign direct investment (FDI) from international investors without adhering to the pricing guidelines established by the RBI.
The ED indicated that OCL’s subsidiary, Little Internet Pvt Ltd, also received FDI from foreign investors without following the prescribed RBI pricing guidelines. Meanwhile, Nearbuy India Pvt Ltd failed to report the received FDI within the timeline set by the RBI.
In a regulatory filing on Saturday (March 1), Paytm acknowledged receipt of the ED notice regarding the alleged breach of certain FEMA regulations connected to specific investment transactions involving itself and its subsidiaries, Little Internet and Nearbuy.
