Enforcement Directorate's Findings on Paytm

The Enforcement Directorate (ED) has recently disclosed its investigation into Paytm's parent company, One97 Communications, uncovering potential violations of the Foreign Exchange Management Act (FEMA). The probe revealed that foreign investors have been investing in Paytm, and the company has been allegedly moving money out of the country without reporting to the Reserve Bank of India (RBI).

Paytm's Response: In response to the allegations, a spokesperson for Paytm stated, "We are working towards resolving the matter in accordance with applicable laws and regulatory processes. We remain committed to strengthening processes in adherence and upholding the highest standards of compliance and governance."

Details of the Investigation

The ED's investigation has brought to light that One97 Communications made investments in Singapore without reporting to the RBI, thereby violating FEMA rules. The probe also focuses on Paytm's acquisition of two subsidiaries, Little Internet and Nearbuy India, between 2015 and 2019. Paytm has disclosed this development in a regulatory filing and is currently seeking legal advice to address the allegations.

Further Allegations: The ED has issued a show cause notice to One97 Communications Ltd, its managing director, and other subsidiary companies for contraventions of FEMA provisions amounting to around Rs 611 crore. The investigation reveals that Paytm's flagship company had made foreign investments in Singapore and received foreign direct investment (FDI) from overseas investors without adhering to RBI's pricing guidelines.

Ongoing Probe and Previous Scrutiny

The ongoing probe against Paytm is being conducted at the ED headquarters, with a special director-rank officer looking into the money trail and the credentials of foreign investors who invested in the digital financial platform. Paytm had previously come under the ED scanner for its digital payment gateway's use by some Chinese nationals involved in an alleged cryptocurrency scam to transfer money out of India.