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On Monday, the ED issued a statement in the show cause notice case received by Paytm’s parent company One 97 Communication Limited (OCL) and its subsidiaries. The ED said that OCL did not give information about the foreign investment in Singapore to the Reserve Bank of India (RBI).
Along with this, the company did not submit a report of making foreign step-down subsidiary to RBI. The ED said that OCL’s subsidiary Little Internet Private Limited also earned foreign investment without following the RBI guidelines.
The investigation found that the report of the foreign investment received by the subsidiary company Nearbai India Private Limited was not given to the RBI within the stipulated time frame.
The show cause notice was received on Saturday
Paytm received a show cause notice from the ED in the case of violating the Foreign Exchange Management Act (FEMA) rules. The case is related to transactions of Rs 611 crore between 2015 and 2019. Out of Rs 611 crore, Rs 345 crore is related to investment transactions related to subsidiary company Little Internet Private Limited.
At the same time, 21 crore rupees are associated with Nearbai India Private Limited. The remaining amount is related to Paytm’s parent company One97 Communications Limited. Paytm acquired both companies in 2017.
Paytm said- no effect on services
Paytm has said that this notice has been received on 28 February 2025. These violations took place when these companies were not subsidiaries of forest 97 communications. Paytm said that the case is being resolved. It has no effect on Paytm’s services.
Paytm’s share climbed 70% in a year
The impact of the news of the notice received by Paytm can be seen on Paytm’s stock on Monday. On Friday, Paytm’s stock closed down 1.59% to close at Rs 714. The stock has increased by 70% in a year. At the same time, the stock has declined by about 27% this year.
Paytm lost ₹ 208 crore in Q3Fy25
Paytm’s parent company One 97 Communications was a net loss of Rs 208 crore in the third quarter (October-December) of FY 2024-25. Paytm’s deficit in the same quarter of a year ago was Rs 220 crore.
The company’s revenue fell 36% to Rs 1,828 crore in the October-December quarter. It was Rs 2,850 crore in the same quarter of a year ago i.e. Q3Fy24.
FEMA Act was brought in 1999
The Foreign Exchange Management Act i.e. FEMA was introduced to replace an old Act FERA (Foreign Exchange Regulation Act) in the year 1999. The main objective of the introduction of FEMA in India was to facilitate external trade and payment.
FEMA has outlined procedures for all foreign exchange transactions in India. Under this Act, the ED has been given the responsibility of investigating suspected violations of foreign exchange laws and rules, taking action against those who commit violations and imposing fines on them.
