ED probes Paytm for international funding and Fema violations

NEW DELHI: The Enforcement Directorate on Monday mentioned it has discovered international traders making investments in Paytm’s father or mother firm, One97 Communications, and that the corporate has been taking cash overseas with out reporting it to the RBI, in alleged violation of the Overseas Trade Administration Act (FEMA).
In a press release, the probe company mentioned its investigation in opposition to Paytm, its MD and associated entities has additionally revealed that One97 Communications made investments in Singapore with out reporting to RBI, violating FEMA guidelines.
“We’re working in direction of resolving the matter in accordance with relevant legal guidelines and regulatory processes. We stay dedicated to strengthening processes in adherence and upholding the best requirements of compliance and governance,” a spokesperson for the corporate mentioned.
The ED discover, dated Feb 27, cited alleged contraventions between 2015 and 2019 associated to Paytm’s acquisition of two subsidiaries – Little Web and Nearbuy India. The corporate disclosed the event in a regulatory submitting on Saturday, stating that it’s presently in search of authorized recommendation and evaluating its choices to handle the allegations.
The probe in opposition to Paytm is being carried out on the ED headquarters with a particular director rank officer designated to wanting into the cash path and the credentials of international traders who had made investments within the digital monetary platform.
“The ED has issued a present trigger discover to Paytm’s flagship One97 Communications Ltd, its managing director and different Paytm subsidiary firms: Little Web Pvt Ltd and Nearbuy India Pvt Ltd, for the contraventions of the provisions of FEMA to the tune of round Rs 611 crore. Investigation reveals that Paytm’s flagship firm OCL had made international funding in Singapore and didn’t file essential reporting to RBI for creation of abroad step down subsidiaries. Additional, OCL had additionally acquired international direct funding (FDI) from abroad traders with out following correct pricing tips stipulated by the RBI,” the company mentioned.
One97 Communications’ subsidiary in India, Little Web Pvt Ltd, had additionally acquired FDI from abroad “with out following the pricing tips stipulated by RBI”, whereas Nearbuy India Pvt Ltd, one other subsidiary of OCL, didn’t report the FDI acquired by the corporate inside the time-frame prescribed by the RBI, the company claimed.
Paytm got here below the ED scanner just a few years in the past as a part of a probe into using its digital cost gateway by some Chinese language nationals concerned in an alleged cryptocurrency rip-off to switch cash out of India.