The Enforcement Directorate has issued a notice to One97 Communications, the parent company of Paytm, for allegedly violating FEMA rules related to investment transactions involving its subsidiaries, Little Internet and Nearbuy. The notice pertains to alleged contraventions from 2015 to 2019, specifically during a time when the two companies were not yet subsidiaries of One97. The allegations involve an aggregate amount exceeding Rs 611 crore. Paytm stated it is addressing the matter legally and that the situation does not affect its services to consumers and merchants. The two subsidiaries were acquired by Paytm in 2017.
New Delhi:
The Enforcement Directorate has issued a notice to One97 Communications, the parent company of Paytm, for purported violations of specific FEMA regulations involving the firm and its two subsidiaries—Little Internet and Nearbuy—related to certain investment dealings, as stated in an exchange filing.
Paytm responded by clarifying that the alleged violations occurred during the timeframe when these companies were not under its ownership.
“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 notice pertains to alleged violations for the years 2015 to 2019 of certain provisions of the ‘FEMA’ by the Company concerning its acquisition of two subsidiaries known as Little Internet Private Limited (“LIPL”) and Nearbuy India Private Limited (“NIPL”), previously Groupon, along with certain Directors and Officers,” the fintech firm One97 Communications (OCL), which manages the Paytm brand, disclosed to BSE regarding the FEMA violation notification it received from the Enforcement Directorate on February 28. The notice does not outline any financial repercussions but asserts violations relating to a total exceeding Rs 611 crore.
As per the breakdown provided by the company, transactions from OCL correspond to over Rs 245 crore, while those from LIPL account for around Rs 345 crore, and NIPL’s total is about Rs 21 crore, all cited in the alleged infringement.
“The alleged violations concern specific investment dealings involving OCL, LIPL, and NIPL,” the company elucidated.
“Certain alleged violations linked to the two acquired entities, Little Internet Private Limited and NearBuy India Private Limited, relate to a timeframe when they were not subsidiaries of the Company,” the filing noted.
Paytm has stated that it is actively addressing this issue with the intention of resolution in compliance with applicable laws and emphasizes that this situation does not affect Paytm’s services for its consumers and merchants, assuring that all services remain fully operational and secure as usual.
“To address this matter in line with relevant laws and regulatory procedures, the Company is obtaining essential legal counsel and assessing suitable remedies,” the filing added.
Paytm acquired the two companies back in 2017.
The Groupon India operation was founded by Ankur Warikoo, who served as its first CEO in 2011. Warikoo and the primary management team of Groupon India obtained the Indian segment from Groupon in 2015 and transitioned it into an independent entity.
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