The Reserve Bank issues a compounding order linked to legacy foreign investment transactions in Paytm subsidiaries Little Internet and Nearbuy.
RBI Issues Compounding Order Under FEMA
One 97 Communications Limited**, the parent entity of Paytm, has received a compounding order from the Reserve Bank of India under the Foreign Exchange Management Act (FEMA).
In a regulatory filing made under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements, the company said it received the RBI order on February 2, 2026. The order relates to one of the compounding applications submitted by the company in connection with foreign investment transactions involving its subsidiaries.
Details of the Compounding Penalty
The RBI imposed a compounding fee of ₹18.76 lakh for certain foreign investments made in Little Internet Private Limited by Little Internet Singapore Pte Ltd.
According to the filing, the underlying transaction value was approximately ₹33 crore, and the transactions took place between March 2016 and June 2017. The contravention relates to Regulation 5(1) read with Regulation 13 of FEMA Notification 120/RB-2004.
One 97 Communications stated that it is in the process of paying the fee, after which the matter will be disposed of. The company clarified that the order has no material impact on its financials or operations.
Earlier Compounding Related to Nearbuy
The company also disclosed that during the quarter ended December 31, 2025, the RBI compounded certain matters relating to Nearbuy India Private Limited for a fee of approximately ₹4.28 lakh.
Together, the compounding fees related to Little Internet and Nearbuy total around ₹23.04 lakh.
Background. Enforcement Directorate Notice
Earlier, on March 1, 2025, One 97 Communications had informed stock exchanges that it received a show cause notice from the Enforcement Directorate under FEMA.
The notice, dated February 27, 2025, relates to alleged contraventions during the period 2015 to 2019, involving an aggregate transaction amount of approximately ₹611.17 crore. The company had also provided a breakup of the amounts attributed to One 97 Communications, Little Internet, and Nearbuy.
RBI Observations in Earlier Filings
In its Q2 FY26 financial results note, the company said the RBI had compounded matters of an aggregate value of about ₹21 crore relating to Nearbuy India Private Limited.
The same disclosure added that the RBI observed that matters involving an aggregate value of around ₹312 crore relating to Little Internet complied with applicable laws, following the company’s application and corrective steps.
Paytm’s Operational Performance
Operationally, Paytm reported a profit of ₹225 crore and revenue of ₹2,194 crore in Q3 FY26 for the quarter ended December 31, 2025.
The company reiterated that the compounding orders are regulatory in nature, relate to legacy transactions, and do not affect ongoing business operations.
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RBI Governor Sanjay Malhotra and Paytm CEO Vijay Shekhar Sharma
Photo: ISN
