Paytm, one of India's leading digital payments and financial services companies, has received a show cause notice from the Directorate of Enforcement (ED) over alleged violations of the Foreign Exchange Management Act, 1999 (FEMA). The issue pertains to investments in two companies—Little Internet Pvt Ltd (LIPL) and NearBuy India Pvt Ltd (NIPL)—which Paytm acquired at a later stage. The allegations cover transactions that took place between 2015 and 2019, including a period before Paytm had acquired these companies.
In its stock exchange filing, Paytm clarified that the allegations relate to compliance with FEMA regulations in connection with its investments in LIPL and NIPL. However, it also pointed out that some of the alleged violations date back to a time when these two companies were not subsidiaries of Paytm. This means that the company may not have been directly responsible for certain transactions that are now under scrutiny.
To address the matter, Paytm is currently seeking legal advice and is evaluating possible legal and regulatory remedies to resolve the issue. The company has assured that it will comply with all necessary legal procedures in line with FEMA and other applicable laws.
Despite the ongoing regulatory challenge, Paytm emphasized that it remains committed to strengthening its business operations and driving the growth of digital transactions in India. The company, headquartered in Noida, continues to expand its digital payments ecosystem while working on resolving regulatory concerns.
