Paytm SEBI warning

Paytm Receives SEBI Warning for Unapproved Transactions: What You Need to Know

One 97 Communications, the parent company of Paytm, recently received an administrative warning from the Securities and Exchange Board of India (SEBI). The warning pertains to unapproved related party transactions in the fiscal year 2021-22 involving Paytm Payments Bank. Let’s delve into the details of this issue, Paytm’s response, and the implications for the company.

Understanding the SEBI Warning

What Triggered the Warning?

SEBI’s letter, dated July 15, 2024, highlights compliance lapses concerning related party transactions totaling ₹324 crore and ₹36 crore, conducted without necessary approvals from Paytm’s audit committee or shareholders.

Nature of the Transactions

These transactions between Paytm and the now-defunct Paytm Payments Bank (PPBL) were not formally approved, raising concerns about adherence to regulatory norms.

Pay

tm’s Stand on the Issue

Adherence to SEBI Regulations

Paytm asserts that it has always adhered to SEBI Listing Regulations, specifically Regulation 23 read with Regulation 4(1)(h). The company maintains that there has been no financial impact from these transactions and emphasizes its commitment to high compliance standards and transparency.

SEBI’s Concerns and Observations

Discrepancies Identified

SEBI pointed out discrepancies in Paytm’s compliance claims. While the company provided cumulative transaction values for reference, the transactions were still categorized as material related party transactions by the Board and Audit Committee.

Future Compliance Measures

SEBI has instructed Paytm to improve its compliance standards and present the administrative warning letter to its board for corrective actions, with a report on measures taken to be submitted within 10 days.

Market Reaction and Impact

Share Price Movement

Following the release of SEBI’s warning, Paytm’s shares dropped by 2% to Rs 461.1, while the broader market remained positive.

Paytm’s Response and Commitments

Detailed Response to SEBI

In its stock filing, Paytm reiterated its compliance with all regulatory requirements and stated that it will provide a detailed response to SEBI’s concerns. The company emphasized that the warning will not affect its financial, operational, or other activities.

Enhancing Compliance Protocols

Paytm is committed to addressing SEBI’s concerns and enhancing its compliance protocols to prevent future issues. The company reassured stakeholders of its dedication to maintaining transparency and integrity in all operations.

Conclusion

Paytm’s administrative warning from SEBI underscores the importance of strict adherence to regulatory norms. While the company has reaffirmed its commitment to compliance and transparency, this incident serves as a reminder of the critical need for robust governance practices.

FAQs

What were the unapproved transactions mentioned in SEBI’s warning to Paytm? The unapproved transactions involved Paytm Payments Bank and amounted to ₹324 crore and ₹36 crore, conducted without audit committee or shareholder approval.
How did Paytm respond to SEBI’s warning? Paytm stated that it has always adhered to SEBI regulations and will address SEBI’s concerns with a detailed response. The company emphasized there was no financial impact from these transactions.
What actions has SEBI instructed Paytm to take? SEBI instructed Paytm to present the warning letter to its board for corrective actions and to submit a report on the measures taken within 10 days.
Did the SEBI warning affect Paytm’s stock price? Yes, following the release of SEBI’s warning, Paytm’s shares dropped by 2% to Rs 461.1.
What measures is Paytm taking to enhance compliance? Paytm is enhancing its compliance protocols to prevent future issues and remains committed to maintaining transparency and integrity in its operations

Paytm SEBI warning unapproved transactions

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