Paytm Seeks RBI Relief In Rs 611-Crore FEMA Case

Paytm's parent company — One97 Communications Ltd — is learnt to have filed a compounding application with the Reserve Bank of India in an effort to settle an ongoing case involving alleged violations of the Foreign Exchange Management Act.

Last year, One97 Communications had received a show cause notice from the enforcement directorate for alleged contraventions amounting to Rs 611 crore.

The move is aimed at resolving the matter through regulatory channels and avoiding formal adjudication proceedings by the ED, according to people familiar with the matter.

“The company has requested the ED to hold off on adjudication while the RBI reviews its compounding application,” a source privy to the matter told NDTV Profit.

Under FEMA provisions, compounding allows an entity to voluntarily admit a violation, accept responsibility, and resolve the issue by paying a monetary penalty. This process serves as an alternative to legal proceedings and helps avoid prolonged litigation. The RBI, however, holds sole discretion on whether to permit compounding. If the violation is not compounded, the ED can proceed with adjudication.

The federal agency's Feb 27 show cause notice to One97 Communications Ltd, its managing director, and key subsidiaries — Little Internet Pvt Ltd and Nearbuy India Pvt Ltd. cited multiple FEMA violations. This includes unreported foreign investment by OCL in a Singapore-based subsidiary, receipt of FDI by OCL and Little Internet Pvt Ltd without adhering to RBI pricing norms, and delayed reporting of acquisitions and FDI by Nearbuy India Pvt Ltd.

Emails seeking comment from Paytm and the RBI remained unanswered at the time of publishing the story.

FEMA, or the Foreign Exchange Management Act, regulates foreign exchange transactions in India and is enforced by the ED in cases of non-compliance.