![Paytm receives SEBI reprimand over FY22 related party transactions with PPBL Paytm receives SEBI reprimand over FY22 related party transactions with PPBL](https://thefederal.com/h-upload/2023/08/07/407150-paytm.webp)
Paytm receives SEBI 'reprimand' over FY22 related party transactions with PPBL
Paytm's parent company, One 97 Communications, pledged to uphold compliance standards and respond to SEBI's 'administrative rap'
One 97 Communications, Paytm's parent company, received an 'administrative warning letter' from SEBI for entering into related party transactions with Paytm Payments Bank (PPBL) in FY22 without proper approval from the audit committee or shareholders.
In a BSE filing, the company said it has consistently acted in compliance with SEBI regulations.
The fintech firm further said it is "committed to upholding and demonstrating the highest compliance standards and shall also submit its response to SEBI." The Securities and Exchange Board of India (SEBI), in a letter dated July 15, had said it had conducted an examination in relation to the disclosure of financial and other information relating to One 97 Communications and its associate Paytm Payments Bank Limited (PPBL).
"In this context, the following non-compliances were observed during the course of examination...The excess related party transactions (RPTs) entered into by the company and/or its subsidiaries with PPBL during the FY 2021-22 are without due approval of either the audit committee or the shareholders," according to the SEBI letter.
Paytm shares letter
Paytm, in its filing to BSE, shared the contents of the SEBI letter.
According to the letter by the markets regulator, 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.
"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," SEBI said.
The SEBI letter tabulated the excess RPTs (between OCL and its subsidiaries, with PPBL) that was without approval at Rs 324 crore (availing of services by OCL from PPBL) and Rs 36 crore (rendering of services by OCL to PPBL).
Viewed very 'seriously'
SEBI said the violations have been viewed very "seriously".
"You are, therefore, warned to be careful in future and improve your compliance standards to avoid the recurrence of such instances in future, failing which appropriate enforcement action would be initiated in accordance with the law," SEBI said.
The markets regulator also advised the company to place its letter before the board in its meeting for its information and necessary corrective action "post which action taken report shall be submitted to SEBI within 10 days thereafter."
(With agency inputs)