The Enforcement Directorate (ED) has issued a show-cause notice to Paytm-owner One97 Communications Ltd. (OCL) over alleged violations of the Foreign Exchange Management Act (FEMA) between 2015 and 2019. The notice pertains to financial transactions linked to Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) before they were acquired by Paytm.

Key Allegations and Financial Details

The notice, received on February 28, 2025, highlights alleged FEMA violations worth ₹611 crore, with the financial breakdown as follows:

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  • OCL transactions: ₹245 crore
  • LIPL transactions: ₹345 crore
  • NIPL transactions: ₹21 crore

According to Paytm’s exchange filing, the alleged contraventions involve investment transactions before 2017, when these companies were acquired by OCL.

“Certain alleged contraventions attributable to the two acquired companies pertain to a period when they were not subsidiaries of the company,” the filing stated.

Paytm’s Response and Legal Strategy

Paytm assured that its services remain unaffected and that it is working towards resolving the issue in compliance with applicable laws.

“We are seeking legal advice and evaluating appropriate remedies to address the matter,” the company clarified.

Background on Nearbuy and Little Internet

  • Nearbuy (formerly Groupon India) was established in 2011 by Ankur Warikoo. In 2015, Warikoo and his management team bought out Groupon India, making it an independent entity.
  • Paytm later acquired both Nearbuy and Little Internet in 2017, integrating them into its fintech ecosystem.

Regulatory Impact and Future Implications

The ED’s notice is part of ongoing scrutiny of fintech firms for compliance with foreign exchange regulations. While the financial impact on Paytm is yet to be specified, the company remains under regulatory observation.

With legal consultations underway, the fintech giant aims to resolve the matter efficiently, ensuring business continuity for its customers and merchants.