RBI has slapped a compounding order worth INR 18.8 Lakh on fintech major Paytm pertaining to alleged Foreign Exchange Management Act (FEMA) breach
In a filing with the exchanges, the company informed that it is in the process of making the payment for the compounding fee, pursuant to which the matter will be disposed off
Earlier, RBI had issued a separate compounding order worth INR 4.3 Lakh to Paytm for its investment in Nearby India
The Reserve Bank of India (RBI) has slapped a compounding order worth INR 18.8 Lakh on fintech major Paytm
pertaining to alleged Foreign Exchange Management Act (FEMA) breach. In a filing with the exchanges, the company informed that it is in the process of making the payment for the compounding fee, pursuant to which the matter will be disposed off.
The penalty pertains to Paytm’s acquisition of ecommerce startup Little Internet, which was completed between March 2016 to June 2017. The transaction saw Paytm invest in the startup’s two holding entities — Little Internet Singapore Pte Ltd and Little Internet Pvt Ltd. The total value of the underlying transaction was INR 33 Cr.
Besides the aforementioned, the RBI had issued a separate compounding order worth INR 4.3 Lakh to Paytm for its investment in Nearby India. The company disclosed this while sharing its financial update for the December quarter earlier last week.
Both of the orders, which cumulatively imply a penalty of INR 23.1 Lakh, relates to the 2017 acquisition of Nearbuy and Little by Paytm to boost their online-to-offline (O2O) and hyperlocal services.
These settlements are part of a broader FEMA case that the company has been dealing with since last year. In March 2025, Paytm received a show cause notice from the Enforcement Directorate (ED) over alleged foreign exchange violations involving transactions worth INR 611.17 Cr.
Of the total alleged contraventions, INR 245.2 Cr was attributed to One97 Communications, while INR 344.99 Cr and INR 20.97 Cr were linked to Little Internet and Nearbuy, respectively. The ED notice was also issued to the two subsidiaries and certain current and former directors and officers.
Following the notice, Paytm applied to the RBI for compounding, a process that allows companies to settle FEMA violations by paying a penalty instead of going through formal legal proceedings. The RBI has sole discretion to approve or reject such applications.
Earlier disclosures showed that the RBI had partly compounded the case. As per Paytm’s Q2 FY26 auditor’s note, matters worth INR 21 Cr related to Nearbuy were settled during the quarter.
The RBI also observed that transactions worth about INR 312 Cr linked to Little Internet were compliant with applicable laws.
The latest settlement comes as Paytm continues to clean up regulatory and legal issues. Over the past year, the company and its founder Vijay Shekhar Sharma have settled multiple cases with regulators, including SEBI and tax authorities.
Meanwhile, the company maintained profitability in Q3 FY26, reporting a net profit of INR 225 Cr– about 10X increased from what it reported in previous quarter. Its operating revenue jumped 20% to INR 2,194 Cr.
Paytm’s share rose 2.31% to INR 1197.15 on BSE today.
Curated by Dr. Elena Rodriguez
