SEBI issues warning to Paytm over related party transactions with payments bank

Paytm's parent company, One 97 Communications, has received an administrative warning letter from the market regulator SEBI. The Securities and Exchange Board of India (SEBI) mentioned that certain transactions in FY22 between Paytm and the now-defunct Paytm Payments Bank were carried out without approval from the company's audit committee or its shareholders.

"On one hand, the company claimed that it had provided a cumulative numerical value of the transactions undertaken with PPBL by the Company and its subsidiaries for reference by the shareholders and that transactions between subsidiaries of OCL and PPBL do not qualify as RPTs during the FY 2021-22," SEBI's letter said.

In response to the SEBI administrative warning, Paytm, said that it has consistently adhered to all listing regulations and will address SEBI's concerns with a detailed response.

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"But, on the other hand, the Board and Audit Committee of the Company have considered transactions between OCL and/or its subsidiaries with PPBL as material RPTs and passed a resolution that RPTs with PPBL will be within the limits as mentioned therein the respective resolutions," the letter further stated.

"The above violations have been viewed very seriously," SEBI said, adding that there should be caution in the future and an improvement in compliance standards to prevent such instances from happening again. Failure to do so could lead to initiation of appropriate enforcement action in accordance with the law, SEBI added.

 

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The company emphasized its long-standing adherence to regulatory requirements and commitment to high compliance standards in its response. Paytm assured that this warning will not affect its financial, operational, or other activities. The company stated that it is taking steps to address SEBI's concerns and enhance compliance protocols to prevent such issues in the future.

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