Paytm’s Parent Company, One97 Communication, Faces Legal Action Over FEMA Violations; ED Issues Show Cause Notice for Rs. 611 Crore Contravention
(Judicial Quest News Network)
Delhi 3, March. 2025.In a significant development, the Directorate of Enforcement (ED) has issued a Show Cause Notice (SCN) to One97 Communication Ltd (OCL), the parent company of Paytm, along with its Managing Director and other affiliated entities, including its subsidiaries Little Internet Pvt Ltd and Nearbuy India Pvt Ltd. The SCN has been issued over alleged violations of the provisions of the Foreign Exchange Management Act (FEMA), 1999, amounting to a staggering Rs. 611 Crore.
The investigation, led by the Special Director of Enforcement (Adjudication) in New Delhi, reveals several breaches by OCL and its subsidiaries. According to the ED, OCL engaged in foreign investments in Singapore but failed to submit the necessary reports to the Reserve Bank of India (RBI) for the establishment of its overseas step-down subsidiary. This lack of compliance with RBI’s regulations raises concerns regarding the company’s adherence to FEMA guidelines.
In addition to this, the investigation uncovered that OCL received Foreign Direct Investment (FDI) from international investors without following the proper pricing guidelines set by the RBI. This contravention of pricing norms is a serious violation, as it could have implications for the transparency and fairness of financial transactions within the country.
The issues extend beyond OCL to its Indian subsidiaries. Little Internet Pvt Ltd, another OCL subsidiary, also received FDI from overseas investors without adhering to RBI’s pricing guidelines, compounding the severity of the violations. Furthermore, Nearbuy India Pvt Ltd, another affiliate of OCL, failed to report its received FDI within the time frame prescribed by the RBI.
As a result, the ED has now initiated adjudication proceedings under FEMA, 1999, with the Show Cause Notice serving as the first step in the legal process. The authorities will now seek to determine the extent of the violations and impose any necessary penalties or corrective actions.
This legal development marks a pivotal moment for Paytm’s parent company, as it could face significant financial and regulatory consequences if the allegations are proven to be accurate. The company, known for its vast digital ecosystem in India, may now have to navigate a complex legal and financial situation, potentially affecting its operations and investor confidence.
Stay tuned for further updates as the adjudication process progresses.
