India’s Enforcement Directorate (ED) announced on Monday that its investigation found payment services provider Paytm and its subsidiaries have breached the Foreign Exchange Management Act (FEMA), accumulating violations worth Rs. 6.11 billion (approximately $70 million).
The agency reported that Paytm made a foreign investment in Singapore without submitting the necessary filings to the Reserve Bank of India (RBI).
Additionally, the ED highlighted that Paytm had accepted foreign direct investment from international investors in disregard of appropriate pricing guidelines established by the RBI.
Paytm’s subsidiary, Little Internet, similarly received foreign direct investment without adhering to the RBI’s pricing directives. Furthermore, another subsidiary, Nearbuy India, failed to report foreign direct investment within the mandated timeline, according to the ED.
A spokesperson for Paytm stated, “We are working towards resolving the matter in accordance with applicable laws and regulatory processes.”
On Saturday, the company reassured its customers and merchants that the ED’s notice would not affect its services.
The recent notice from the ED coincides with Paytm’s pending application for a payment aggregation license from the RBI that would enable the company to manage online payments.
In January 2024, the RBI had mandated Paytm’s subsidiary, Paytm Payments Bank, to cease accepting new deposits in its accounts or digital wallets due to ongoing supervisory concerns and repeated non-compliance with regulations.
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