2024-07-17 04:10:26
New Delhi: Paytm’s parent company One97 Communications has received an ‘administrative warning letter’ from market regulator SEBI. The matter is related to transactions with Paytm Payments Banks (PPBL) in the financial year 2021-22 without the approval of the audit committee or shareholders. The market regulator has described it as a case of ‘serious violation’. At the same time, the company said in a notice to BSE that it has consistently worked in compliance with SEBI rules. According to the fintech company, ‘It is committed to maintaining compliance standards and transparency. It will also give its reply to SEBI.’ The Securities and Exchange Board of India (SEBI) said in a letter dated July 15 that it has investigated the disclosure of financial and other information related to One97 Communications and its affiliate Paytm Payments Bank Limited (PPBL).
What has SEBI said?
According to the letter from SEBI, ‘The following non-compliances were observed during the investigation in this regard… In the financial year 2021-22, the company and/or its subsidiaries entered into additional related party transactions (RPTs) with PPBL without the appropriate approval of either the audit committee or the shareholders.’ Paytm shared the contents of SEBI’s letter in a notice to BSE.
According to the market regulator’s letter, the company claimed that it had provided the cumulative numerical value of transactions made by the company and its subsidiaries with PPBL for reference of shareholders. The transactions between OCL and PPBL’s subsidiaries are not correct as RPT during the financial year 2021-22.
SEBI said, ‘On the other hand, the Board of Directors and Audit Committee of the company have considered the transaction between OCL and/or its subsidiaries with PPBL as a significant RPT. Also, a resolution was passed that the RPT with PPBL will be within the limits mentioned in the respective resolutions.’
Advice to be careful in future
The SEBI letter lists additional RPTs (between OCL and its subsidiaries with PPBL) without approval, amounting to Rs 324 crore (receiving services from PPBL on behalf of OCL) and Rs 36 crore (providing services to PPBL on behalf of OCL).
SEBI said the violations were extremely “serious”. “Therefore, you are cautioned to be more careful and improve your compliance standards to prevent any recurrence in future. In case of failure to do so, appropriate enforcement action will be initiated as per law,” it said.
The market regulator also advised the company to place its letter before the board of directors meeting for its information and necessary corrective action, ‘followed by an action taken report to Sebi within 10 days.’
After this warning, the shares of One97 Communications closed with a decline on Tuesday. The company’s shares fell by 2 percent to Rs 459.75. At one point during trading, the stock had gone down to the level of Rs 454.85.