India's leading digital payments company, Paytm, has received a show cause notice from the country's financial crime-fighting agency, the Enforcement Directorate (ED), for alleged violations of the Foreign Exchange Management Act (FEMA).

The notice pertains to irregularities related to the acquisition of two subsidiaries, Little Internet Private Limited and Nearbuy India Private Limited, during the period from 2015 to 2019.

Paytm clarified that these alleged infractions occurred before these entities became its subsidiaries.

The company has assured that the notice will have no impact on its services provided to consumers and merchants, and it is seeking legal advice to resolve the matter in accordance with applicable laws and regulatory processes.

This development comes as Paytm continues to face regulatory scrutiny, following previous restrictions imposed by the Reserve Bank of India on its banking arm, Paytm Payments Bank.

Reuters