Due to suspected violations of the Foreign Exchange Management Act (FEMA), One97 Communications Ltd. (OCL), the parent company of Paytm, received a show-cause notice from the Enforcement Directorate (ED). The ED has found non-compliance in OCL totaling Rs 245 crore, Little Internet totaling Rs 345 crore, and Nearbuy India totaling Rs 20.9 crore.
Certain investment transactions in these companies are connected to the alleged crimes. The Enforcement Directorate (ED) sent out a show-cause notice on Monday regarding the company and two of its subsidiaries for alleged Rs 611 crore in foreign currency rule violations.
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The notice pertains to alleged contraventions of certain provisions of the Foreign Exchange Management Act (FEMA), Paytm disclosed in a filing with the BSE on Saturday. Paytm revealed in a filing with the BSE on Saturday that the notification, dated February 27, relates to purported violations of specific provisions of the Foreign Exchange Management Act (FEMA). The notification was sent to the business on Friday night.
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In 2017, Paytm merged Little Internet and Nearbuy, two hyperlocal sales platforms. Elevation Capital and Tiger Global Management provided the funding for Little Internet. It had raised about $50 million in equity capital. Co-founded by Ankur Warikoo, Nearbuy had raised about $22 million in equity capital and was supported by Peak XV Partners (formerly Sequoia India).
The issue emerges shortly after the company paid Rs 45 lakh to the Securities and Exchange Board of India to resolve a complaint involving specific regulatory infractions. Early last year, the Reserve Bank of India ( RBI ) took regulatory action against Paytm Payments Bank, an associate of the fintech platform.
The purported infractions span the years 2015 through 2019. According to the corporation, the alleged violations in the LIPL and NIPL cases happened while these businesses weren’t OCL subsidiaries.
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In order to “resolve the matter in accordance with applicable laws and regulatory processes,” OCL stated that it is obtaining legal counsel and taking the necessary actions. According to Paytm, the issue has no bearing on the services it offers to customers and merchants.
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