New Delhi: In a concerning development for investors, shares of One97 Communications, the parent company of Paytm, dropped over 4% on Monday following a notice from the Enforcement Directorate (ED) regarding alleged violations of certain FEMA rules. The notice pertains to investment transactions involving the company and its two subsidiaries, Little Internet and Nearbuy.

On the National Stock Exchange (NSE), the stock fell by 4.39%, closing at Rs 683.55 per share. On the Bombay Stock Exchange (BSE), it dropped 4.37%, closing at Rs 685 per share.

The broader market was also in the negative zone, with the BSE Sensex declining 271.22 points or 0.37%, reaching 72,926.88 during late morning trade. The NSE Nifty also slipped by 93.60 points or 0.42%, settling at 22,031.10.

In a regulatory filing on Saturday, Paytm confirmed that it had received a notice from the Enforcement Directorate related to alleged FEMA violations by the company and its subsidiaries concerning certain investment transactions. However, Paytm later clarified that the alleged breach occurred during a time when Little Internet and Nearbuy were not yet subsidiaries of the company.

"We hereby inform you that a show cause notice...has been received by the company on February 28, 2025...from the Directorate of Enforcement.

"This is in relation to alleged contraventions for the years 2015 to 2019 of certain provisions of the 'FEMA' by the company, in relation to its acquisition of two subsidiaries namely Little Internet Pvt Ltd (LIPL) and Nearbuy India Pvt Ltd (NIPL), erstwhile Groupon, along with certain directors and officers," the company said in a regulatory filing.

One97 Communications (OCL) said that it has received a FEMA (Foreign Exchange Management Act) rules violation notice from the ED on February 28, which does not specify financial impact but alleges contraventions in respect of aggregate amount of over Rs 611 crore.

According to the break-up shared by the company, OCL transactions amounting to over Rs 245 crore, LIPL's about Rs 345 crore and NIPL about Rs 21 crore have been listed in the alleged breach.

"The alleged contraventions relate to certain investment transactions relating to OCL, LIPL and NIPL," it explained.

"Certain alleged contraventions attributable to two acquired companies - Little Internet Pvt Ltd and NearBuy India Pvt Ltd - pertain to a period when these were not subsidiaries of the Company," the filing said.

Paytm said the matter is being addressed with a focus on resolving it in accordance with applicable laws and 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.

"To resolve the matter in accordance with applicable laws and regulatory processes, the Company is seeking necessary legal advice and evaluating appropriate remedies," the filing added.