Paytm’s share Price dropped after receiving a warning from SEBI regarding unauthorised transactions with Paytm Payments Bank Limited (PPBL). The warning highlighted transactions made without proper approvals from the audit committee or shareholders, leading to a negative impact on Paytm’s parent company, One 97 Communications, shares.
The transactions in question involved a significant amount, totaling ₹360 crore, which exceeded the previously approved limits. This discrepancy was noted by SEBI in an administrative letter to Paytm, pointing out the oversight in governance by the firm.
SEBI’s scrutiny revealed that while Paytm reported the cumulative value of transactions with PPBL for shareholder reference, these did not accurately reflect the transactions between Paytm’s subsidiaries and PPBL. This misrepresentation called into question the transparency of Paytm’s financial dealings.
The company had previously recognized these transactions as material related party transactions (RPTs) and had passed resolutions to set limits on such transactions. However, SEBI found that Paytm had breached these resolutions, highlighting a serious lapse in corporate governance.
SEBI has expressed its concerns sternly, warning Paytm to enhance its compliance procedures to prevent future violations. The regulator stressed that any further lapses could lead to stringent enforcement actions, urging Paytm to adhere strictly to legal standards to maintain market trust.
