The Directorate of Enforcement (ED) has issued show cause notice to One97 Communication Ltd, parent company of Paytm, and its managing director and others for the contraventions of provisions of FEMA, 1999.

ED, in its release, said that investigation reveals that Paytm's flagship company OCL had made foreign investment in Singapore and did not file necessary reporting to RBI for creation of overseas step down subsidiary. 

"Further, OCL had also received Foreign Direct Investment from overseas investors without following proper pricing guidelines stipulated by RBI," it added.

Last week, Paytm informed the stock exchange that it has received a show cause notice from the ED in connection with violations of foreign exchange norms. The Noida-based fintech major, in its filing, said that the alleged FEMA violations are linked to its acquisition of two subsidiaries -- namely Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) erstwhile Groupon. 

These transactions took place between 2015 and 2019.

"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," Paytm said.

The notice has also been issued to the "certain current and past directors and officers of the company and its two subsidiaries."

The show cause notice alleges contraventions in respect of aggregate transaction amounts of Rs 611 crore -- Rs 245 crore attributable to OCL; Rs 344.99 crore to Little Internet, and Rs 20.97 crore to Nearbuy. 

Paytm further stated that while the notice doesn't specify a "financial impact, in the form of a demand or penalty", it is " seeking necessary legal advice and evaluating appropriate remedies to resolve the matter."

"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," the company added.

Paytm acquired Nearbuy and Little in 2017, merged them, and took a majority stake in the combined entity.