FEMA ‘1999 has been alleged to have been violated by Paytm’s parent company, One 97 Communications (OCL), and two show cause notices have been received for transactions worth ₹611.17 crore. The notices were also served on its subsidiaries, namely, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) and were informed in the company filing to the exchange.
The only thing is that the foreign exchange transactions that were made from 2015 to 2019 did not involve OCL and its subsidiaries/LIPL and NIPL, respectively. The highest is LIPL at more than ₹344.99 crore, followed by OCL and its transactions of more than ₹245.20 crore. The notices also contain the names of several current and former company executives and directors.
However, the notices do not contain any amount of fine or demand in the form of money, hence there is no direct financial effect to Paytm at the moment. In response, OCL said it has sought legal advice and is considering what is the best course of action to take in order to address the matter in accordance with the regulatory requirements.
However, OCL also said that it is in the process of obtaining legal advice as to the appropriate action to be taken in relation to the matter and is in the process of determining the appropriate action to be taken in relation to the matter.
In response to the question of whether Paytm has any comments on the matter, the company said: “Paytm is committed to transparency, governance and compliance. This matter is being investigated with due diligence and does not have any impact on our services to consumers and merchants. The issue has been reported to the relevant authorities and we are waiting for their decision. We will continue to cooperate with the authorities in the investigation of the matter. The matter is still under investigation and we are waiting for the authorities to come up with their findings. As for now, all our core services are available and we are doing our best to solve the problem. The current state of affairs is that the issues have not been fully addressed and the companies are still struggling to meet the demands of the law. It is expected that once the matters are resolved, the companies will be in a better position to operate effectively. The recent reprimand by the RBI to Paytm Payments Bank and the show cause notices to OCL and its affiliates are examples of regulatory bodies holding fintechs to high standards of accountability and compliance with laws and regulations. As digital financial services continue to penetrate more sectors of the economy, it is essential that companies operate with transparency and accountability to protect the interests of consumers and the integrity of the financial system.
