Paytm's One97 Communications Receives ED Notice Over Alleged FEMA Violations in Subsidiary Acquisitions

The Enforcement Directorate has issued a notice to One97 Communications, the owner of Paytm, for alleged violations of FEMA rules. This relates to the acquisition of two subsidiaries. According to an exchange filing, these alleged breaches occurred before the companies became Paytm's subsidiaries.

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One97 Communications informed BSE about receiving the FEMA violation notice on February 28. The notice concerns its subsidiaries, Little Internet Private Limited and Nearbuy India Private Limited. These alleged contraventions occurred between 2015 and 2019 under the Foreign Exchange Management Act, 1999.

FEMA Notice Details

The notice targets One97 Communications Limited, its subsidiaries LIPL and NIPL, and certain directors and officers. It addresses investment transactions involving OCL, LIPL, and NIPL. The company clarified that some alleged breaches happened when these entities were not yet its subsidiaries.

Paytm acquired Little Internet Private Limited and Nearbuy India Private Limited in 2017. The Groupon India business was initially started by Ankur Warikoo in 2011 as its founding CEO. In 2015, Warikoo and his team bought Groupon's India business, making it independent.

Company's Response

Paytm stated that it is addressing the issue with a focus on resolving it according to applicable laws. They assured that this matter does not affect their services to consumers and merchants. All services remain fully operational and secure.

The company is seeking legal advice to resolve the matter in line with regulatory processes. They are evaluating appropriate remedies to address the situation effectively.

Paytm remains committed to ensuring compliance with all relevant laws while maintaining uninterrupted service for its users. The company continues to operate smoothly despite the ongoing legal proceedings.