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Paytm parent One97 Communications has reportedly filed a compounding application with the Reserve Bank of India to settle an ongoing case pertaining to alleged violations of the Foreign Exchange Management Act, after receiving a show cause notice from the Enforcement Directorate earlier this year.
An NDTV Profit report said that the fintech major has requested the ED to hold off on formal adjudication proceedings while the RBI reviews the application.
If permitted, the matter may be resolved by paying a penalty under the compounding process.
Compounding is a process where an entity voluntarily admits to a violation, accepts responsibility, and seeks to settle the matter by paying a monetary penalty, rather than undergoing formal legal proceedings. The RBI has sole discretion to approve or reject a compounding application.
Inc42 has reached out to Paytm for comments on the development. The story will be updated based on the response.
In March earlier this year, Paytm received a show cause notice from the ED in connection with alleged violations of foreign exchange norms involving an aggregate transaction amount of INR 611.17 Cr.
In an exchange filing, the company then clarified that the notice pertained to its acquisition of two companies, Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL), formerly known as Groupon, between 2015 and 2019.
Along with One97 Communications, the notice was also issued to the two subsidiaries and “certain current and past directors and officers of the company and its two subsidiaries.”
Out of the total alleged contraventions of INR 611.17 Cr, INR 245.2 Cr was attributed to One97 Communications, while INR 344.99 Cr and INR 20.97 Cr were attributed to LIPL and NIPL, respectively.
The Foreign Exchange Management Act (FEMA) is India’s primary legislation governing foreign exchange transactions, including investments, remittances, and cross-border payments.
(The story will be updated soon.)
The post Paytm Approaches RBI To Settle Alleged FEMA Breach: Report appeared first on Inc42 Media.
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