Paytm share price rebounds after falling 4% on ED notice over alleged FEMA violations. What led to the bounceback?

Shares of financial technology firm One 97 Communications, parent of payment aggregator Paytm, dropped as much as 4% in intraday trade on Monday, March 3, after the enforcement directorate (ED) sent a notice to the fintech firm for the alleged violation of certain FEMA rules by the company and its two subsidiaries.

However, the stock erased all losses by the afternoon session to trade in the green amid a recovery in the broader markets and following a partnership with RBL Bank.

ED notice to Paytm

In an exchange filing by the company on March 1, Paytm said, “We hereby inform that a show cause notice dated February 27, 2025, has been received by the Company on February 28, 2025, at 19:27 Hrs. from the Directorate of Enforcement, Government of India. This is in relation to alleged contraventions for the years 2015 to 2019 of certain provisions of the Foreign Exchange Management Act, 1999 (“FEMA”) by the Company, in relation to its acquisition of two subsidiaries, namely Little Internet Private Limited (“LIPL”) and Nearbuy India Private Limited (“NIPL”), erstwhile Groupon, along with certain Directors & Officers.”

The company added that certain alleged contraventions attributable to two acquired companies – Little Internet Private Limited and Nearbuy India Private Limited – pertain to a period when these were not subsidiaries of Paytm.

The new-age company further added that to resolve the matter, it is seeking necessary legal advice and evaluating appropriate remedies.

“This matter is being addressed with a focus on resolving it in accordance with the relevant laws. There is no impact on Paytm’s services to its consumers and merchants, and all services remain fully operational and secure, as always,” it added.

Paytm partners with RBL Bank

Earlier today, Paytm, via a separate filing, informed bourses that it has partnered with RBL Bank to offer its Soundbox and Card Machines to the bank’s merchant partners.

The integration of the Paytm for Business dashboard would enable merchants to track transactions in real time, improving transparency and operational efficiency. Additionally, Paytm’s payment devices support a wide range of payment methods, including UPI, RuPay credit card on UPI, UPI Lite, debit cards, and credit cards, as well as EMI options from leading banks, providing flexibility for both merchants and customers.

Stock Price Impact

Paytm share price tanked over 4% to the day’s low of ₹685 apiece in Monday’s intraday trading session. The stock opened lower than its previous close at ₹698.45 per share and then extended its slide. But it later rebounded during the day, following a bounce-back in the benchmark indices.

The BSE benchmark Sensex gyrated over 850 points in intraday trade today, showcasing high volatility on Dalal Street. As of 1.15 pm, the 30-pack index was trading flat with a positive bias at 73,225. Paytm share price was trading at ₹730.70, up 2.01%, on the BSE at the same time.

Paytm shares have performed well in the last one year, gaining as much as 76%. However, amid the recent bouts of selling in the broader market, the stock is down 2% in the last one-month period and 19% in the past three months.

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