New Delhi: Digital payments giant Paytm has received a show-cause notice from the Enforcement Directorate (ED) for alleged violations of the Foreign Exchange Management Act (FEMA). The notice, dated February 27, 2025, was issued concerning transactions related to the acquisition of two subsidiaries, Little Internet Private Limited and Nearby India Private Limited, which Paytm acquired in 2017.
As per the ED, the violations are said to have been made between 2015 and 2019, a time that partially comes before Paytm bought the two companies. The notice was formally served on Paytm on 28 February 2025. The probe centers on probable discrepancies in compliance with FEMA rules while making investments and transactions related to these subsidiaries.
In a formal exchange filing, Paytm explained that it pursues legal counsel and considers suitable steps by relevant laws and regulatory protocols. The company assured us that the consumer and merchant services of the company would not be affected by this incident.
A Paytm spokesperson stated, “We are committed to maintaining transparency, governance, and compliance in all our business practices. The matter is being handled as per the legal framework.”
The ED’s action against Paytm comes amidst a broader regulatory scrutiny of digital payment companies in India. As the case unfolds, industry analysts suggest that the outcome could set a precedent for regulatory authorities addressing compliance lapses in the rapidly expanding fintech sector.