Paytm Money Pays INR 45.50 Lakh Fine To Settle Case For Violation Of SEBI Norms

Paytm’s wealthtech subsidiary Paytm Money has paid a fine of INR 45.50 Lakh to settle a case with SEBI pertaining to alleged violations of norms for technical glitch framework.

In a settlement order, the markets regulator said it had issued a show-cause notice to Paytm Money for violating several provisions of the SEBI Act, 1992:

• Not setting the permissible limit of 70% for generation of timely alerts for all critical assets
• Not submitting the documentary evidence with respect to peak load observed for the inspection period
• Not connecting all its critical systems with Logs Analytics and Monitoring Application and
• Not conducting live DR drill for the first half of the fiscal year 2023-24 (H1 FY24)

“Pending adjudication proceedings, the noticee (Paytm Money) proposed to settle the instant proceedings initiated against it, without admitting or denying the findings of facts and conclusions of law, through a settlement order and filed settlement application dated September 17, 2024, with SEBI…” the order read.

The development comes weeks after Paytm and its directors and officials, including current as well as former, settled a case with SEBI by paying a cumulative sum of INR 3.32 Cr.

It is pertinent to note that Paytm has been facing scrutiny from regulatory bodies for the last two years. Paytm was among the 11 applicants, which received an in-principle nod from the Reserve Bank of India (RBI) to set up a payments bank in 2015.

Fast forward to 2024, the central bank barred Paytm Payments Bank from onboarding new customers and accepting deposits across its services such as FASTag and wallet for alleged violation of know your customer (KYC) norms. The RBI’s clampdown has effectively barred the payments bank from carrying out its business.

In March 2024, Paytm Payments Bank was slapped with a fine of INR 5.49 Cr by the Financial Intelligence Unit-India (FIU-IND) for violating the country’s money laundering laws.

The RBI’s clampdown on Paytm Payments Bank sent the company’s stock tumbling. This has also resulted in Paytm losing market share in the UPI market.

Meanwhile, Paytm Money, in a statement, said that it has roped in former IRS and SEBI whole-time member Rajeev Krishnamuralilal as a non-executive independent director on its board. It is pertinent to note that Krishnamuralilal is already on the board of One 97 Communications, the parent of Paytm.

In addition to his role as a non-executive independent director, Krishnamuralilal will also serve as a member of the audit committee as well as the chairperson of the risk management committee and the corporate social responsibility committee at Paytm Money.