Winning Bizness Desk
Mumbai.The Enforcement Directorate (ED) on Monday issued a statement regarding the show-cause notice sent to One 97 Communications Limited (OCL), the parent company of Paytm, and its subsidiaries.
ED stated that OCL failed to report foreign investments made in Singapore to the Reserve Bank of India (RBI). Additionally, the company did not submit a report to RBI regarding the creation of a foreign step-down subsidiary. ED also revealed that OCL’s subsidiary, Little Internet Private Limited, received foreign investments without complying with RBI guidelines. During the investigation, it was found that another subsidiary, Nearby India Private Limited, also failed to submit the required reports on foreign investments to RBI within the stipulated timeframe.
Case pertains to transactions amounting to ₹611 crore
On Saturday, Paytm received a show-cause notice from ED for alleged violations of the Foreign Exchange Management Act (FEMA). The case pertains to transactions amounting to ₹611 crore between 2015 and 2019. Of this, ₹345 crore is linked to investment transactions involving Little Internet Private Limited, while ₹21 crore is associated with Nearby India Private Limited. The remaining amount is connected to Paytm’s parent company, One 97 Communications Limited. Paytm had acquired both these companies in 2017.
Actively addressing the matter- company
In response, Paytm stated that the notice was received on February 28, 2025, and that the alleged violations occurred before these companies became subsidiaries of One 97 Communications. The company assured that it is actively addressing the matter and clarified that its services remain unaffected by the issue. Meanwhile, the news of the notice may impact Paytm’s stock performance. On Friday, Paytm's shares closed at ₹714, down 1.59%. Over the past year, the stock has surged by 70%, though it has seen a decline of nearly 27% this year.
One 97 Communications, reported a net loss of ₹208 crore in the third quarter
Paytm's parent company, One 97 Communications, reported a net loss of ₹208 crore in the third quarter of FY25 (October-December), slightly improving from a ₹220 crore loss in the same quarter last year. The company's revenue for the quarter fell 36% year-on-year to ₹1,828 crore, compared to ₹2,850 crore in Q3FY24. The Foreign Exchange Management Act (FEMA) was introduced in 1999, replacing the older Foreign Exchange Regulation Act (FERA). FEMA aims to facilitate external trade and payments in India. Under this act, the ED is authorized to investigate suspected violations of foreign exchange laws, take action against offenders, and impose penalties.
