Paytm gets ED show cause notice for transactions involving over Rs 611 cr

Company says these violations pertain to a period when these firms were not subsidiaries of One97 Communications

One97 Communications (OCL), the operator of the Paytm brand, has received a show cause notice from the Enforcement Directorate (ED) for alleged violations of the Foreign Exchange Management Act (Fema) involving aggregate transactions worth over Rs 611 crore related to the acquisition of its subsidiaries.

 

The alleged violations pertain to the company’s acquisition of two subsidiaries—Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL), formerly Groupon—including certain directors and officers.

 

About Rs 345 crore of the total Rs 611 crore is linked to investment transactions involving LIPL, while Rs 21 crore relates to NIPL. The remaining amount pertains to OCL, according to an exchange filing.

 

Paytm said these violations occurred when these companies were not subsidiaries of OCL.

 

“To resolve the matter in accordance with applicable laws and regulatory processes, the company is seeking necessary legal advice and evaluating appropriate remedies,” Paytm said in a statement.

 

It added that the development has no impact on its services to consumers and merchants, which remain fully operational.

 

In 2017, Paytm merged the deal discovery platforms Nearbuy.com and Little Internet, becoming the majority shareholder of the merged entity.

 

Last year, the company denied any instances of investigation or violation of foreign exchange rules by itself or its associate, Paytm Payments Bank Limited.

 

This followed serious concerns raised by the Reserve Bank of India (RBI) over multiple violations by Paytm Payments Bank.

 

On January 31, 2024, the RBI announced its decision to shut down most of Paytm Payments Bank’s operations—including deposits, top-ups, and fund transfers—from March 1, 2024, citing “persistent non-compliances and continued material supervisory concerns.”