New Delhi, [Date] – India’s financial crime watchdog, the Enforcement Directorate (ED), has revealed that Paytm and its subsidiaries violated the country’s Foreign Exchange Management Act (FEMA) to the extent of 6.11 billion rupees ($70 million).
According to a statement released on Monday, the ED found that Paytm made a foreign investment in Singapore without adhering to the necessary reporting requirements set by the Reserve Bank of India (RBI). Furthermore, the fintech giant received foreign direct investment (FDI) from overseas investors without following RBI’s stipulated pricing guidelines.
Paytm’s subsidiary, Little Internet, was also found to have received FDI without complying with the RBI’s pricing regulations. Meanwhile, another unit, Nearbuy India, failed to report foreign direct investment within the mandated timeframe, the agency added.
In response to the allegations, a Paytm spokesperson stated, “We are working towards resolving the matter in accordance with applicable laws and regulatory processes.”
Despite the ED’s findings, Paytm assured its customers and merchants on Saturday that the notice would not impact its services.
The scrutiny comes at a critical time for Paytm, as it awaits RBI’s approval for a payment aggregation license, which would enable it to accept and disburse payments online. Earlier this year, in January 2024, the RBI had directed Paytm Payments Bank to halt the acceptance of new deposits in its accounts and digital wallets, citing persistent non-compliance and supervisory concerns.
The latest regulatory setback raises further challenges for Paytm as it seeks to navigate India’s stringent financial compliance landscape.
