Paytm, 2 Arms Receive Rs 611 Crore ED Notice for Alleged FEMA Violation

The Enforcement Directorate has sent a notice to Paytm-owner One97 Communications for alleged violation of certain Foreign Exchange Management Act (FEMA) rules by the company and its two subsidiaries- Little Internet and Nearbuy, with respect to certain investment transactions, according to an exchange filing.

Paytm clarified that the alleged breach pertains to the period when the two 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 Private Limited ("LIPL") and Nearbuy India Private Limited ("NIPL") erstwhile Groupon, along with certain Directors and Officers," the filing said.

Fintech firm One97 Communications (OCL), which owns the Paytm brand, informed BSE that it has received a FEMA violation notice from the Enforcement Directorate on February 28 which does not specify financial impact but alleges contraventions in respect of aggregate amount of over Rs 611 crore.

According to the break-up shared by the company, OCL transactions amounting to over RS 245 crore, LIPL's about Rs 345 crore and NIPL about Rs 21 crore have been listed in the alleged breach.

"The alleged contraventions relate to certain investment transactions relating to OCL, LIPL and NIPL," it explained.

"Certain alleged contraventions attributable to two acquired companies - Little Internet Private Limited and NearBuy India Private Limited - pertain to a period when these were not subsidiaries of the company," the filing said.

Paytm said the matter is being addressed with a focus on resolving it in accordance with applicable laws and there is no impact of this matter on Paytm's services to its consumers and merchants, and all services are fully operational and secure, as always.

"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 said.

Paytm had acquired the two companies in 2017.

The Groupon India business was started by Ankur Warikoo as its founding CEO in 2011. Warikoo and the core management team of Groupon India bought the India business of Groupon in 2015 and made it an independent entity.