New Delhi, March 3 The Enforcement Directorate (ED) on Monday issued a show-cause notice to One97 Communications Ltd, the parent company of Paytm, its Managing Director Vijay Shekhar Sharma and others for violating certain provisions of the Foreign Exchange Management Act, 1999 (FEMA, 1999) worth Rs 611 crore.
The show-cause notice has been issued by the Special Director of Enforcement (Adjudication), New Delhi to Paytm’s flagship company One97 Communications Limited (OCL), its Managing Director and other Paytm subsidiary companies -- Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) -- for the contraventions of the provisions of FEMA, 1999, to the tune of around Rs 611 crore.
The investigation conducted by ED revealed that Paytm's flagship company “had made foreign investment in Singapore and did not file necessary reporting to RBI for creation of overseas step-down subsidiary”.
“Further, OCL had also received Foreign Direct Investment from overseas investors without following proper pricing guidelines stipulated by RBI,” according to an ED statement.
OCL's subsidiary company in India, Little Internet had also received Foreign Direct Investment (FDI) from overseas investors without following the pricing guidelines stipulated by RBI, according to the regulator.
“Nearbuy India Pvt Ltd, another subsidiary of OCL, did not report the Foreign Direct Investment (FDI) received by the company within the time frame prescribed by the RBI,” said the ED.
The show-cause notice has been issued to initiate the adjudication proceedings under FEMA, 1999.
Earlier, Paytm had said it would seek resolution of alleged FEMA contraventions related to two acquired subsidiaries -- Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL).
The company said in a stock exchange filing that certain alleged contraventions are attributable to these subsidiaries for transactions during a period before they became part of Paytm.
Paytm said that it was seeking legal advice and evaluating appropriate remedies through available regulatory processes.
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