Paytm announced on Saturday, March 1, 2025, that it has received a show-cause notice from the crime-fighting agency Enforcement Directorate (ED) for allegedly violating certain Foreign Exchange Management Act (FEMA) rules. The notice relates to violations related to the acquisition of two subsidiaries – Little Internet Pvt Ltd and Nearbuy India Pvt Ltd for the years 2015 to 2019, with respect to certain investment transactions in the deal.
One97 Communications, the operator of the leading fintech major, said in a regulatory filing to the stock exchanges that the alleged breach pertains to the period when the two companies were not its subsidiaries. “This pertains to a period when these companies were not subsidiaries of Paytm,” said Paytm.
Paytm to resolve FEMA allegations, seek legal advise
“We inform you that the Company received a show cause notice on February 28, 2025 from the Directorate of Enforcement. This is in relation to alleged contraventions for the years 2015 to 2019 of certain provisions of the “FEMA” by the Company in relation to its acquisition of two subsidiaries, namely Little Internet Pvt Ltd (LIPL) and Nearbuy India Pvt Ltd (NIPL) erstwhile Groupon, along with certain Directors and Officers,” said Paytm.
Paytm mentioned in its filing that it received a FEMA violation notice from the ED on February 28, which does not specify financial impact but alleges contraventions regarding an aggregate amount of ₹611 crore. According to the break-up shared by the fintech, One97 Communications’ transactions amounting to over RS 245 crore, LIPL’s transactions of about ₹345 crore, and NIPL’s about ₹21 crore have been listed in the alleged breach.
“Certain alleged contraventions attributable to two acquired companies – Little Internet Pvt Ltd and NearBuy India Pvt Ltd – pertain to a period when these were not subsidiaries of the Company,” said One97 Communications.
Paytm explained that the matter is being addressed and that it is focused on resolving it under applicable laws. There is no impact on Paytm’s services to its consumers and merchants; all services are operational and secure. “All services on the Paytm app remain fully operational and secure, with no impact on users or merchants,” stated the fintech company.
“To resolve the matter under applicable laws and regulatory processes, the company is seeking necessary legal advice and evaluating appropriate remedies,” said One97 Communications. “Paytm upholds transparency, governance, and compliance principles in all its business practices.”
Paytm acquired the two companies in 2017. Ankur Warikoo, the founding CEO of Groupon India, started the business in 2011. In 2015, Warikoo and the core management team of Groupon India bought the India business and made it an independent entity.