Paytm to pay Rs 18.76 lakh after RBI compounds FEMA violation linked to subsidiary investments

One 97 Communications, the parent firm of Paytm, has received a compounding order from the Reserve Bank of India (RBI) for breaches under the Foreign Exchange Management Act (FEMA) concerning past investments in its subsidiary, Little Internet Private Limited. The development follows an investigation into investment flows from Little Internet Singapore into the Indian entity, linked to transactions between March 2016 and June 2017. The RBI has imposed a compounding fee of Rs 18.76 lakh in relation to these transactions, which involved an aggregate value of approximately Rs 33 crore.

In a regulatory disclosure on Monday, Paytm stated: "In a stock exchange filing on Monday, the company said the RBI has imposed a compounding fee of Rs 18.76 lakh in connection with certain investments made in Little Internet Private Limited by Little Internet Singapore." The company clarified that the order pertains only to the specific historic transactions identified in the RBI review.

Paytm explained that it is taking the necessary steps to comply with the order: "Paytm said it is in the process of paying the amount." The company further assured stakeholders that the penalty would not have a significant effect on its financial health or day-to-day operations.

"The company said the RBI order is not expected to have a material impact on its financials or operations." This statement comes as Paytm seeks to maintain stability amid ongoing regulatory scrutiny within the fintech sector.

Paytm had previously acquired hyperlocal discovery platforms Little Internet and Nearbuy in 2017, merging them into its wider business portfolio. Little Internet was backed by Tiger Global Management and Elevation Capital, while Nearbuy, cofounded by Ankur Warikoo, counted Peak XV Partners as investors. These acquisitions expanded Paytm's offerings and were part of a broader diversification strategy.

The compounding order enables Paytm to settle the FEMA contravention by paying the monetary penalty, thereby avoiding further adjudication or prosecution. Authorities often use such orders as an expedient method to resolve technical violations without resorting to protracted legal proceedings.

Paytm Q3 results

Paytm (One 97 Communications Ltd.) posted a profit after tax of ₹225 crore for the quarter ended December 2025, marking a sharp turnaround from a net loss of ₹208 crore in the corresponding quarter last year. The year-on-year improvement in profitability stood at ₹433 crore.

Revenue from operations rose 20% year-on-year to ₹2,194 crore, compared with ₹1,829 crore in the year-ago period. The growth was driven by higher payments gross merchandise value (GMV), a rise in merchant subscription revenues, and increased traction in the distribution of financial services, the company said.

Paytm’s UPI business continued to gain momentum, with market share expanding for the third consecutive quarter. Consumer UPI GMV climbed 35% over the last nine months, significantly outpacing the overall industry growth of 16%, according to the company.