Paytm shares sink 2% on show cause notice from ED on FEMA violations

Payment aggregator One97 Communications, the parent of the Paytm brand, saw its shares crack over two percent in the early session on March 3, after the firm received a FEMA violation notice.

On February 28, the Enforcement Directorate slapped the firm with a FEMA violation notice for its subsidiaries, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL).

At 10 am, Paytm shares were quoting Rs 700.3 on the NSE, down 2 percent compared to the previous session's close.

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 regulatory filing.

The notice has been issued to One97 Communications, two of its acquired subsidiaries, LIPL and NIPL, and certain current and past Directors and officers of the company and its two subsidiaries. "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.

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"To resolve the matter in accordance with applicable laws and regulatory processes, the company is seeking necessary legal advice and evaluating appropriate remedies," it added.

According to the break-up shared by the company, OCL transactions amounting to over RS 245 crore, LIPL's about Rs 345 crore and NIPL about Rs 21 crore have been listed in the alleged breach.

The company also said that it upholds principles of transparency, governance, and compliance in all its business practices. "This matter is being addressed with a focus on resolving it in accordance with applicable laws." "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," Paytm said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.