ED Issues Notice to Paytm's Parent Company Over Rs 611 Crore FEMA Violations
Click to start listening
Synopsis
On March 3, the Enforcement Directorate issued a notice to One97 Communications Ltd, parent of Paytm, and its MD Vijay Shekhar Sharma, for violating FEMA provisions amounting to Rs 611 crore. The notice covers other subsidiaries and highlights concerns over foreign investments and reporting lapses.
Key Takeaways
- ED issued a notice for Rs 611 crore FEMA violations.
- One97 Communications Ltd and its MD are implicated.
- Investigations revealed unreported foreign investments.
- Subsidiaries also failed to follow RBI guidelines.
- Legal remedies are being considered by Paytm.
New Delhi, March 3 (NationPress) The Enforcement Directorate (ED) has issued a show-cause notice to One97 Communications Ltd, the parent company of Paytm, along with its Managing Director Vijay Shekhar Sharma and others, for infringing specific provisions of the Foreign Exchange Management Act, 1999 (FEMA, 1999) amounting to Rs 611 crore.
The notice was served by the Special Director of Enforcement (Adjudication) in New Delhi to Paytm’s primary entity, One97 Communications Limited (OCL), its Managing Director, and various Paytm subsidiaries, including Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL), for FEMA violations totaling approximately Rs 611 crore.
The ED's investigation uncovered that Paytm's flagship entity had executed foreign investments in Singapore without filing the required reports to the RBI for establishing an overseas step-down subsidiary.
Additionally, OCL accepted Foreign Direct Investment from international investors without adhering to the pricing regulations established by the RBI, as indicated in an ED statement.
Moreover, OCL's Indian subsidiary, Little Internet, also received Foreign Direct Investment from foreign investors without complying with the RBI's pricing guidelines, according to the regulatory body.
As for Nearbuy India Pvt Ltd, another OCL subsidiary, it failed to report the Foreign Direct Investment it received within the required timeframe set by the RBI, according to the ED.
The issuance of this notice marks the commencement of adjudication proceedings under FEMA, 1999.
Previously, Paytm announced its intention to address the alleged FEMA violations concerning its two acquired subsidiaries, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL).
The company disclosed in a stock exchange filing that some alleged infractions are linked to these subsidiaries for activities conducted before they joined Paytm.
Paytm stated it is seeking legal counsel and assessing suitable remedies via the available regulatory pathways.
