India’s Paytm has received a show cause notice from the country’s financial crime-fighting agency Enforcement Directorate (ED) over alleged violations of the Foreign Exchange Management Act (FEMA) between 2015 and 2019, the company said in a statement.
The notice pertains to irregularities in the acquisition of two subsidiaries, Little Internet Private Limited and Nearbuy India Private Limited, during this period, according to the statement.
"This is in relation to alleged contraventions for the years 2015 to 2019 of certain provisions of the Foreign Exchange Management Act, 1999 ("FEMA") by the Company, in relation to its acquisition of two subsidiaries namely Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) erstwhile Groupon, along with certain Directors & Officers," the filing said.
The company said it is seeking legal advice on the matter and assured that the notice would have no impact on its services or customers.
"To resolve the matter in accordance with applicable laws and regulatory processes, the Company is seeking necessary legal advice and evaluating appropriate remedies," the filing said.
Paytm had acquired the two companies in 2017.
The Groupon India business was started by Ankur Warikoo as its founding CEO in 2011. Warikoo and the core management team of Groupon India bought the India business of Groupon in 2015 and made it an independent entity.
Paytm, one of India's leading digital payments companies, has been under regulatory scrutiny in recent years.
In March 2022, the Reserve Bank of India imposed restrictions on its banking arm, Paytm Payments Bank, citing compliance issues.
On January 31, 2024, the RBI imposed major business restrictions on Paytm Payments Bank, including accepting fresh deposits and doing credit transactions after February 29.
Founded in 2010 by Vijay Shekhar Sharma, Paytm began as a platform for prepaid mobile recharges before evolving into India’s largest digital payments service.
Over time, it expanded its offerings to include bill payments, money transfers, and online shopping, becoming a one-stop solution for financial transactions.
(with input from agencies)