Paytm gets show cause notice over alleged FEMA violations; company clarifies the compliance lapses go back to ...

One 97 Communications (OCL), the operator of the Paytm Digital Payments app, has been issued a show cause notice by the Directorate of Enforcement (ED) for alleged foreign exchange rule breaches totaling Rs 611 crore across the company and two of its subsidiaries. In a BSE filing on Saturday (March 1), OCL disclosed that the notice, dated February 27, pertains to supposed violations of specific provisions under the Foreign Exchange Management Act (Fema).
According to OCL, the ED pinpointed non-compliance involving Rs 245 crore at OCL, Rs 345 crore at Little Internet, and Rs 20.9 crore at Nearbuy India. These alleged violations stem from certain investment transactions within these entities, the company explained.
OCL stated it is consulting legal experts and taking necessary steps to address the issue in line with applicable laws and regulations. The Noida-based company clarified that the compliance lapses in its subsidiaries occurred prior to their acquisition by Paytm. Little Internet and Nearbuy, both hyperlocal deals platforms, were acquired by Paytm in 2017 and later merged. Little Internet had secured about $50 million in equity funding from Tiger Global Management and Elevation Capital, while Nearbuy, co-founded by Ankur Warikoo, raised approximately $22 million from Peak XV Partners (formerly Sequoia India).
This development follows OCL’s recent resolution of a separate case with the Securities and Exchange Board of India, settled for Rs 45 lakh over certain regulatory infractions. Additionally, early last year, Paytm’s associate entity, Paytm Payments Bank, faced regulatory scrutiny from the Reserve Bank of India (RBI).