Paytm alleged FEMA violations: Following reports of ED (Enforcement Directorate) sending a notice to Paytm, shares of One97 Communications plunged around 4% before recovering.
A regulatory filing on Saturday revealed that Paytm received notice from the Enforcement Directorate (ED) regarding alleged FEMA rule violations by the company and its subsidiaries – Little Internet and Nearbuy – concerning specific investment transactions.
Paytm subsequently clarified that the alleged violations occurred when these companies were not its subsidiaries.
“We hereby inform you that a show cause notice…has been received by the company on February 28, 2025…from the Directorate of Enforcement.
“This is in relation to alleged contraventions for the years 2015 to 2019 of certain provisions of the ‘FEMA’ by the company, in relation to its acquisition of two subsidiaries namely Little Internet Pvt Ltd (LIPL) and Nearbuy India Pvt Ltd (NIPL), erstwhile Groupon, along with certain directors and officers,” the company stated in its regulatory filing.
One97 Communications received the FEMA notice on February 28, indicating alleged violations involving transactions totalling over Rs 611 crore, though without specifying the financial impact.
The company detailed that the alleged violations involved OCL transactions of over Rs 245 crore, LIPL’s approximately Rs 345 crore, and NIPL’s about Rs 21 crore.
“The alleged contraventions relate to certain investment transactions relating to OCL, LIPL and NIPL,” it elaborated.
“Certain alleged contraventions attributable to two acquired companies – Little Internet Pvt Ltd and NearBuy India Pvt Ltd – pertain to a period when these were not subsidiaries of the Company,” the filing stated.
Paytm assured that they are addressing the situation legally, emphasising that their services remain unaffected and fully operational for consumers and merchants.
“To resolve the matter in accordance with applicable laws and regulatory processes, the Company is seeking necessary legal advice and evaluating appropriate remedies,” the filing mentioned.
Paytm acquired these two companies in 2017.
Ankur Warikoo established Groupon India as its founding CEO in 2011. In 2015, Warikoo and the core management team purchased Groupon’s India operations, establishing it as an independent entity.
