• Source:JND
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New Delhi: The Enforcement Directorate (ED) has sent a notice to fintech firm Paytm owner One97 Communications for alleged violation of certain FEMA rules by the company in relation to the acquisition of two subsidiaries, according to exchange filing. One97 Communications (OCL), which owns the Paytm brand, informed BSE that it has received a FEMA violation notice from the Enforcement Directorate on February 28 for its subsidiaries, Little Internet Private Limited and Nearbuy India Private Limited.

"The Financial Intelligence Unit-India (FIU-IND), in furtherance of the powers conferred upon the Director FIU-IND under Section 13(2)(d) of the Prevention of Money Laundering Act (PMLA), 2002, has imposed a monetary penalty of Rs. 5,49,00,000 (rupees five crore forty nine lakh) on Paytm Payments Bank Ltd with reference to the violations of its obligations under the PMLA read with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules) issued thereunder and applicable guidelines and advisories issued by the Director FIU-IND," according to the statement released by the Ministry of Finance on Saturday

"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.

One97 Communications Limited

The notice has been issued to One97 Communications Limited, two of its acquired subsidiaries, LIPL and NIPL, and certain current and past Directors and officers of the company and its two subsidiaries, the filing stated. "The alleged contraventions relate to certain investment transactions relating to OCL, LIPL and NIPL," it explained.

"Certain alleged contraventions attributable to two acquired companies - Little Internet Private Limited and NearBuy India Private Limited - pertain to a period when these were not subsidiaries of the Company," the filing said.

What did Paytm say?

Paytm said the matter is being addressed with a focus on resolving it in accordance with applicable laws and there is no impact of this matter on Paytm's services to its consumers and merchants, and all services are fully operational and secure, as always. 

The notice relates to violations relating to the acquisition of two subsidiaries - Little Internet Private Limited and Nearbuy India Private Limited for the years 2015 to 2019, the company said in a statement.

Will it impact Paytm customers?

The notice has no impact on its services to its consumers and merchants, Paytm added. "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.

(With inputs from agency)