New Delhi – Paytm’s parent company, One97 Communications Ltd, has formally approached the Reserve Bank of India (RBI) seeking to settle an alleged ₹611 crore violation under the Foreign Exchange Management Act (FEMA).
Sources indicate that One97 has filed a compounding application, which allows entities to voluntarily admit contraventions under FEMA and seek a monetary penalty-based resolution, rather than pursuing prolonged litigation or enforcement action.
The move comes in response to a show cause notice issued by the Enforcement Directorate (ED) last year, which cited alleged irregularities involving foreign exchange transactions and compliance gaps.
While specific details of the violation remain undisclosed, the ₹611 crore figure marks a significant case in the fintech sector’s regulatory history. Filing a compounding application is often viewed as a cooperative legal step to resolve matters amicably and avoid further scrutiny.
What Is Compounding Under FEMA?
Compounding under FEMA is a legal provision that enables individuals or companies to voluntarily admit to non-compliance and pay a penalty to regularize the issue without undergoing prosecution. The RBI acts as the authority for compounding most violations.
Background & Implications
This development follows a turbulent year for Paytm and its affiliates, including increasing regulatory oversight, data governance concerns, and operational restructuring within its payments bank arm. A successful resolution could help the company avoid reputational damage and regain regulatory confidence as it navigates India’s evolving fintech ecosystem.
Stay tuned for further updates as the RBI evaluates the application and decides on the potential penalty and course of action.
