Digital payments and financial services giant Paytm has announced its plans to seek resolution concerning alleged contraventions of the Foreign Exchange Management Act (FEMA) related to its acquired subsidiaries, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL).

Background on Allegations

The issues surfaced following a show-cause notice (SCN) issued by the Directorate of Enforcement (ED) on February 28, 2025. This notice cites alleged violations tied to transactions that took place between 2015 and 2019, prior to Paytm’s acquisition of the two companies.

In its clarification, Paytm emphasized that the allegations primarily relate to activities conducted by LIPL and NIPL before they became subsidiaries of Paytm, shifting the focus away from the company’s current operational practices.

Legal Measures and Company Assurance

In response to these allegations, Paytm has engaged legal counsel to explore potential remedies through available regulatory channels. The company reassured stakeholders that the ongoing matter does not disrupt its core operations. All services on the Paytm app remain fully functional, and users will not face any disruptions.

Commitment to Compliance

Paytm reiterated its commitment to governance, transparency, and strict compliance with regulatory requirements as it navigates through these legal matters. The organization aims to resolve the situation promptly while focusing on its service to millions of users and merchants.

Recent Regulatory Challenges

In a related context, last month, the Securities and Exchange Board of India (SEBI) issued a settlement order against Paytm Money. This settlement arose after the company paid ₹45.5 lakh to resolve issues concerning regulatory compliance. This action, stemming from a SCN received on July 24, 2024, involved allegations of non-compliance with SEBI’s framework for technical glitches.