The Enforcement Directorate (ED) on Monday issued a show-cause notice to One97 Communications Ltd, the parent company of Paytm, its Managing Director Vijay Shekhar Sharma, and others for alleged violations of the Foreign Exchange Management Act, 1999 (FEMA) amounting to Rs 611 crore.
The notice was issued by the Special Director of Enforcement (Adjudication), New Delhi, to One97 Communications Ltd (OCL), Paytm’s flagship company, its Managing Director, and its subsidiaries—Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL)—for contraventions of FEMA provisions totaling Rs 611 crore.
According to the ED’s investigation, OCL made foreign investments in Singapore but failed to report the creation of an overseas step-down subsidiary to the Reserve Bank of India (RBI). Further, OCL received Foreign Direct Investment (FDI) from overseas investors without adhering to RBI’s pricing guidelines.
OCL’s Indian subsidiary, Little Internet, also received FDI without complying with RBI’s pricing regulations, while another subsidiary, Nearbuy India Pvt Ltd, failed to report FDI transactions within the prescribed time frame.
The show-cause notice was issued to initiate adjudication proceedings under FEMA.
Earlier, Paytm stated that it would address the alleged FEMA contraventions related to two acquired subsidiaries—Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL). The company said in a stock exchange filing that these alleged violations pertain to transactions made before the subsidiaries became part of Paytm.
Paytm added that it is seeking legal advice and evaluating appropriate remedies through available regulatory processes.
(Inputs from IANS)
