Digital payments giant Paytm has received a show cause notice from the Enforcement Directorate (ED) over alleged violations of the Foreign Exchange Management Act (FEMA). The notice pertains to irregularities in the acquisition of two subsidiaries—Little Internet Private Limited and Nearbuy India Private Limited—between 2015 and 2019, according to a company statement released on Saturday.
Despite the regulatory scrutiny, Paytm has assured users and merchants that its services remain unaffected, and the company is taking necessary legal steps to address the matter.
Paytm’s Response to FEMA Allegations
In an official statement, Paytm clarified that the alleged violations predate its investment in Little Internet and Nearbuy, emphasizing that the transactions occurred before the companies became its subsidiaries.
“To resolve the matter in accordance with applicable laws and regulatory processes, the company is seeking necessary legal advice and evaluating appropriate remedies,” the statement read.
The company also confirmed in its regulatory filing that all services on the Paytm app remain fully functional, ensuring that there is no disruption for consumers or merchants.
Reaffirming Compliance and Business Stability
Reassuring stakeholders, Paytm emphasized its commitment to governance, compliance, and transparency, stating:
“Paytm adheres to the highest standards of transparency, governance, and compliance in all its business operations. We are addressing this matter in line with applicable laws and remain committed to resolving it. There is no impact on Paytm’s services for consumers and merchants, and all operations continue as usual.”
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Regulatory Oversight and the Future of Paytm
The show cause notice comes amid heightened regulatory scrutiny of India’s fintech and digital payments sector. Authorities are closely monitoring corporate governance, foreign exchange compliance, and operational transparency within major financial technology firms.
As Paytm navigates this regulatory challenge, the company’s ability to maintain trust, ensure compliance, and sustain its leadership in India’s digital payments ecosystem will be closely watched by investors, regulators, and consumers alike.
