Paytm's Stock Drops Over 3% Following ED Notice for FEMA Breaches

Synopsis
On March 4, Paytm's parent company, One97 Communications Limited, saw its shares decline by more than 3% after the Enforcement Directorate issued a notice regarding alleged FEMA violations. The notice impacts the firm's subsidiaries as well, but Paytm assures its operations remain unaffected.
Key Takeaways
- Paytm's shares fell over 3% after ED notice.
- Notice relates to alleged violations under FEMA.
- Investigation completed; adjudication process to begin.
- Subsidiaries also received show-cause notices.
- Paytm claims operations remain unaffected.
New Delhi, March 4 (NationPress) Shares of Paytm’s parent company, One97 Communications Limited, experienced a decline exceeding 3 percent during early trading on Tuesday following a notice issued by the Enforcement Directorate (ED) against the firm.
The stock price fell by as much as 3.26 percent to Rs 702 per share in intra-day trading.
The ED revealed on Monday that it had dispatched a notice to One97 Communications, its managing director Vijay Shekhar Sharma, and other related entities for purported violations under the Foreign Exchange Management Act (FEMA).
The agency noted that its investigation has concluded, and the issuance of the notice marks a preliminary step before the adjudication process commences.
As per the ED, Paytm’s subsidiaries, including Little Internet Private and Nearbuy India Private, have also received show-cause notices.
The alleged infractions pertain to foreign investments made by One97 Communications in Singapore, for which the company allegedly failed to submit necessary reports to the Reserve Bank of India (RBI).
Moreover, the firm is accused of accepting Foreign Direct Investments from international investors without adhering to the RBI’s pricing guidelines.
In response, a spokesperson for Paytm stated that the company is dedicated to complying with regulatory requirements and is actively working to settle the issue within the legal framework.
The organization disclosed in a stock exchange filing that the alleged violations are tied to these subsidiaries for transactions that transpired prior to their acquisition by Paytm.
Paytm announced its intention to seek legal advice and is exploring appropriate remedies through available regulatory channels.
The company highlighted that part of the alleged violations dates back to before its investment in Little and Nearbuy, emphasizing that these transactions occurred prior to the companies becoming its subsidiaries.
Furthermore, Paytm assured that this issue does not affect its operations. All services on the Paytm app remain fully functional and secure, ensuring no disruption for users or merchants.