Paytm Faces Enforcement Directorate Notice Over Alleged FEMA Breaches Involving Subsidiaries

One97 Communications, the parent entity of Paytm, has been issued a notice by the Enforcement Directorate (ED) for alleged breaches of the Foreign Exchange Management Act (FEMA). This notice involves its subsidiaries, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL), and relates to activities from 2015 to 2019. Paytm disclosed this information in an exchange filing.

Paytm clarified in its filing that the alleged violations occurred when LIPL and NIPL were not under its ownership. The filing stated, "Certain alleged violations are related to the time when these companies were not subsidiaries of the company, due to two acquired companies - Little Internet Private Limited and Nearbuy India Private Limited."

In response to the notice, Paytm is consulting legal experts to address the situation according to relevant laws. Financial records from One97 Communications indicate transactions exceeding 245 crore rupees for OCL, approximately 345 crore rupees for LIPL, and around 21 crore rupees for NIPL as part of the alleged infractions.

The notice extends beyond One97 Communications to include some current and former directors and officers of OCL and its subsidiary firms. This broad scope highlights the seriousness of the allegations.

Despite these developments, Paytm assures that its services for consumers and merchants remain unaffected. All operations continue as usual, ensuring security and functionality for users.

Paytm's stock closed at 713.30 rupees on Friday. The market will closely monitor its performance on Monday, as the ED notice might influence stock movements. Over the past six months, the stock has delivered a return exceeding 33%.

According to an exchange filing by Paytm, "In accordance with Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we inform that the Company has received a show cause notice dated February 27, 2025 from the Enforcement Directorate, Government of India at 19.27 hrs on February 28, 2025."