The difficulties of Fintech firm Paytm (Paytm) seem to be increasing once again. Its native company One97 Communications (One97 Communications) has been accused of violation of the Foreign Exchange Management Act (FEMA) and has sent a show cause notice to the company from the Enforcement Directorate (ED). ED notice has been received for its two subsidiary companies Little Internet Private Limited and Nearbai India Private Limited. This whole matter is related to transactions worth more than Rs 611 crore, let’s know about it in detail …
Notice found on feema violation
According to PTI report, Paytm’s parent company One 97 Communication has received ED notice on its subsidiary companies Little Internet Private Limited (LIPL) and ED’s notice on transactions related to Nearbai India Private Limited (NIPL). Giving this information in the stock exchange filing on behalf of the company, it has been told that on February 28, FEMA violation notice has been sent from the Enforcement Directorate.
The company said- customers will not affect
In the filing, it has been told by the company that the focus is being made to resolve the matter under the laws and this will not affect the services provided to the users and traders of Paytm. Significantly, the companies with which the original company of Paytm received notices was acquired in 2017. At the same time, the notice of some provisions of FEMA Act 1999 has been given in relation to violation for the year 2015 to 2019.
According to the exchange filing, out of a total transaction of more than Rs 611.17 crore, about Rs 344.99 crore is an investment transactions related to LIPL, while Rs 245.20 crore is related to OCL and the remaining Rs 20.97 crore is connected to NIPL.
What is the FEMA Act?
FEMA i.e. Foreign Exchange Management Act (Foreign Exchange Management Act), which is an Act on foreign exchange management and foreign trade and payment. This is a law applied to the maintenance of foreign exchange market in India along with trade and payment outside the country. Under this Act, the Enforcement Directorate i.e. ED has been given the responsibility of investigating suspected violations of foreign exchange laws and rules, taking action against those who commit violations and imposing a fine on them.
The share will be affected on Monday!
The impact of the news of ED’s notice received by Paytm can be seen on Paytm Share on Monday, the first business day of the week. On Friday, the stock market closed with a decline of 1.59 per cent amidst a major fall in the stock market. Paytm Stock was opened at Rs 715 and was broken up to Rs 698.30 during business. However, in the end its decline was slow, yet it fell to Rs 714. The company’s market cap (Paytm Market Cap) also came down to Rs 45660 crore.
(Note- Be sure to consult your market experts before any investment in the stock market.)