Market regulator SEBI has sent an 'administrative warning letter' to Paytm parent company One 97 Communications in connection with related party transactions it had entered into with its banking arm Paytm Payments Bank Ltd (PPBL) in FY22 without getting approval from the audit committee or its shareholders.
SEBI said the violations are viewed "seriously", adding that "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.”
The embattled fintech major, in a regulatory filing, said it has consistently acted in compliance with SEBI regulations, adding that it is "committed to upholding and demonstrating the highest compliance standards and shall also submit its response to SEBI."
In its letter sent on July 15, SEBI said it had found non-compliances during an examination held in relation to the disclosure of financial and other information relating to the parent company and PPBL.
"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," read the SEBI letter, which was shared by Paytm in its filing to BSE.
Though company claimed that transactions of One 97 Communications and its subsidiaries with PPBL do not qualify as RPTs, its Board and Audit Committee has included them under material RPTs. The fintech firm also added that it had provided a cumulative numerical value of the transactions with PPBL for reference by the shareholders.
According to SEBI, these excess RPTs without approval amounted to Rs 324 crore worth of services availed by the parent company from PPBL and Rs 36 crore worth of services rendered to PPBL by the company.
