Paytm Gets SEBI Administrative Warning on Related Party Transactions

On Monday, July 15, One97 Communications received an administrative warning from SEBI for related party transactions with its subsidiary Paytm Payments Bank in fiscal year 2021-2022.

Key Takeaways from One97 Communications’ SEBI Administrative Warning

• One97 Communications received an administrative warning from the Securities and Exchange Board of India.
• The two violations are related party transactions worth Rs 324 crore and Rs 36 crore respectively.
• According to SEBI, Paytm undertook excess related party transactions without the approval of either the audit committee or the shareholders.
• Paytm in response stated that the company has constantly followed SEBI requirements and is dedicated to maintaining the highest compliance standards.

Market regulator SEBI claimed in the exchange filing that the company's excess related party transactions with Paytm Payments Bank in fiscal year 2021-2022 were done without the consent of either the audit committee or the shareholders. 

The two breaches identified by SEBI are related party transactions of Rs 324 crore and Rs 36 crore, respectively.

‘The above violations have been viewed very seriously. You are, therefore, warned to be careful in the future and improve your compliance standards to avoid recurrence of such instances in the future, failing which appropriate enforcement action would be initiated under the low,’ the SEBI letter stated.

In response, payments aggregator Paytm stated that the company has constantly followed SEBI requirements and is dedicated to maintaining the highest compliance standards. It will also respond to SEBI soon.

One97 Communications' parent company, Paytm, has also said that there would be no impact on the firm's financial, operational, or other operations.

About One97 Communication Limited:

One97 Communications Limited (One97) established in 2000, with its headquarters in Noida Uttar Pradesh, is a mobile internet firm that provides online bill payment services. The firm provides e-commerce merchants with a variety of online bill payment alternatives through digital products and mobile commerce platforms. It also offers Reserve Bank of India (RBI)-approved semi-closed wallet services. One97 also provides mobile content services. The company's services include online cell recharge, tickets, hotel reservations, music, video, games, and the ability to chat with celebrities and peruse their archives. It also makes investments in early-stage mobile firms through the One97 Mobility Fund (OMF). The corporation operates in Africa, Europe, and Southeast Asia.

About Securities and Exchange Board of India

The Securities and Exchange Board of India, or SEBI, was created in 1988 as a non-statutory agency to regulate the securities market. Before its inception, the Controller of Capital Issues was the market's regulating body. SEBI formed an autonomous agency on January 30, 1992, and was granted legislative powers by the Indian Parliament by the SEBI Act, 1992. Its headquarters are in the Bandra Kurla Complex in Mumbai. SEBI also maintained 17 local offices located throughout India to encourage investor education. However, 16 of them were shuttered as part of a reorganisation process.

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