RBI Imposes ₹18.76 Lakh Compounding Fee on One 97 Communications for FEMA Violations

In February 2026, the Reserve Bank of India (RBI) imposed a compounding fee of ₹18.76 lakh on One 97 Communications Limited (OCL) for violations under the Foreign Exchange Management Act, 1999 (FEMA). One 97 Communications is the parent company of Paytm Payments Services Limited. The penalty relates to contraventions in foreign investment transactions involving one of its subsidiaries. The action highlights RBI’s continued focus on ensuring compliance with India’s foreign exchange and investment regulations.

Background: FEMA and RBI’s Regulatory Role

FEMA, enacted in 1999, governs foreign exchange transactions and cross-border investments in India. Its objective is to facilitate external trade while maintaining orderly development of the foreign exchange market. The RBI is the key authority responsible for enforcing FEMA provisions, including monitoring foreign direct investment (FDI) and overseas capital flows.

Under FEMA, violations can be resolved through a compounding mechanism, which allows entities to voluntarily admit contraventions and pay a prescribed fee. Once compounded, the matter is considered closed without further legal proceedings.

Details of the Compounding Order

According to the RBI order, the violation relates to foreign investment transactions carried out during March 2016 to June 2017. During this period:

• Little Internet Singapore Private Limited invested around ₹33 crore into Little Internet Private Limited (LIPL), a subsidiary linked to One 97 Communications.
• The transaction was found to be in contravention of Regulation 5(1) read with Regulation 13 of FEMA Notification No. 120/RB-2004, which governs certain foreign investment norms.

After examining the case, the RBI imposed a compounding fee of ₹18.76 lakh on One 97 Communications Limited.

Disclosure and Compliance

One 97 Communications disclosed the RBI’s compounding order under Regulation 30 of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. This regulation mandates timely disclosure of material events by listed companies to ensure transparency for investors.

The company opted for compounding, which is a voluntary settlement process under FEMA. By paying the prescribed fee, the company resolved the matter, and no further enforcement action will be pursued for this specific contravention.

Other Related Developments

In addition to this case, the RBI also compounded a separate FEMA-related issue involving Nearby India Private Limited, another subsidiary of One 97 Communications. For this violation, a compounding amount of ₹4.28 lakh was imposed during the third quarter (Q3) of the financial year 2025–26 (FY26).

These actions indicate closer regulatory scrutiny of foreign investment transactions within corporate groups, especially those operating in the digital payments and technology space.

Significance of the RBI Action

The RBI’s decision underscores the importance of strict compliance with FEMA regulations, particularly in cases involving cross-border investments and subsidiary transactions. For large technology and fintech companies, adherence to foreign exchange rules is critical due to their complex corporate structures and international operations.

Such enforcement actions also serve as a reminder to listed companies to maintain robust regulatory compliance systems and ensure timely disclosures under SEBI norms.