Paytm receives RBI compounding order, company to pay Rs 18.76 lakh

RBI has imposed a compounding fee of Rs 18.76 lakh on Paytm for FEMA violations linked to certain investments in its subsidiaries, the company said

The Reserve Bank of India (RBI) has imposed a compounding fee of Rs 18.76 lakh on fintech major Paytm over Foreign Exchange Management Act (FEMA) violations linked to certain investments in one of its subsidiaries.

 

While this does not have a material impact on Paytm and its operations, the company said the compounding was undertaken as a regulatory resolution mechanism available under FEMA.

 

Compounding is defined as the process of voluntarily admitting the contravention, pleading guilty and seeking redressal.

 

Once the fee is paid, the matter linked to the violations will be disposed of.

 

“The RBI has imposed a compounding fee of Rs 18.76 lakh in respect of certain investments made in Little Internet Private Limited by Little Internet Singapore Pte Ltd. The company is in the process of making the payment for the compounding fee, pursuant to which this item shall stand disposed,” Paytm said in a statement.

 

 

The firm said that the banking regulator had also compounded certain matters relating to Nearbuy India Private Limited, for a compounding fee of around Rs 4.28 lakh.

 

The compounding relates to transactions carried out between 2016 and 2017.

 

Last year, Paytm received a show-cause notice from the Enforcement Directorate (ED) for alleged FEMA violations involving aggregate transactions worth over Rs 611 crore related to the acquisition of its subsidiaries.

 

The alleged violations were related 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 One97 Communications, the Paytm brand operator.

 

The violations took place when these companies were not subsidiaries of the company, Paytm had said.