New Delhi, March 3, 2025 – The Enforcement Directorate (ED) has issued a notice to Paytm’s parent company, One97 Communications Limited (OCL), its managing director, Vijay Shekhar Sharma, and its subsidiaries for alleged violations of the Foreign Exchange Management Act (FEMA) totaling approximately Rs 611 crore.
The show-cause notice follows an investigation into the company’s foreign investment transactions, which, according to the ED, contravene several provisions of FEMA. This notice is the precursor to potential adjudication proceedings, as revealed by the agency.
In a statement, the ED detailed the findings, alleging that Paytm’s flagship company OCL made foreign investments in Singapore without filing the necessary reports to the Reserve Bank of India (RBI). Additionally, OCL is accused of receiving foreign direct investment (FDI) from overseas investors without adhering to the RBI’s pricing guidelines.
The ED further claimed that two of Paytm’s subsidiaries—Little Internet Pvt Ltd (LIPL) and Nearbuy India Pvt Ltd (NIPL)—were also in violation of FEMA. LIPL allegedly received FDI without following the prescribed pricing guidelines, while NIPL failed to report the FDI it received within the mandatory time frame set by the RBI.
In response to the notice, a Paytm spokesperson emphasized that the company is actively addressing the matter in line with regulatory requirements. "We are working towards resolving the matter in accordance with applicable laws and regulatory processes. We remain committed to strengthening processes in adherence and upholding the highest standards of compliance and governance," the spokesperson said.
Notably, Paytm clarified that the alleged violations concern the period prior to its acquisition of LIPL and NIPL in 2017. The company also provided a breakdown of the alleged violations, with OCL’s transactions amounting to Rs 245 crore, LIPL’s approximately Rs 345 crore, and NIPL’s Rs 21 crore.
Following the news, Paytm's shares dropped more than 4% on the stock market.
This development adds to the regulatory scrutiny facing Paytm, a prominent player in India’s fintech landscape, as it navigates complex compliance challenges.
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