Digital payments and financial services company Paytm has been accused of allegedly violating the country's Foreign Exchange Management Act (FEMA). The company has received a show cause notice from the Enforcement Directorate (ED) regarding these transactions. Paytm has told the stock markets that this notice is related to violations in the purchase of two subsidiaries – Little Internet Private Limited and Nearby India Private Limited. Paytm acquired both the companies in 2017.
In an exchange filing, Paytm said the show cause notice is dated February 27, 2025 and was received by the company on February 28, 2025 at 7.27 pm from the Enforcement Directorate, Government of India. It is regarding alleged violation of certain provisions of FEMA, 1999 by the company, certain directors and officers in relation to the purchase of two subsidiaries Little Internet Private Limited and Nearby India Private Limited between the years 2015 and 2019.
The filing further states that the allegations against the company are about compliance with FEMA regulations in relation to investments in Little Internet Private Limited and Nearbuy India Private Limited. Some of the alleged violations relate to the period when these two companies were not subsidiaries of Paytm.
Paytm is taking necessary legal advice to resolve the matter
Paytm has said that to resolve the matter in accordance with applicable laws and regulatory process, the company is taking necessary legal advice and evaluating appropriate measures. It also said that it maintains the principles of transparency, governance and compliance in all its business practices. The focus is on resolving the matter in accordance with applicable laws. Paytm said that the notice has no impact on its services provided to consumers and merchants.
