SEBI Penalises Paisabazaar For CEO’s Past NISM Certification Lapse

The Securities and Exchange Board of India (SEBI) has imposed a penalty of INR 1 Lakh on Paisabazaar Marketing and Consulting, a subsidiary of PB Fintech, for appointing a principal officer without requisite certification.

“Naveen Kukreja who was appointed as principal officer of Noticee (Paisabazaar), had not obtained the National Institute of Securities Markets (NISM) level 2 series XB certification as on 30/6/2023. Thus, it was observed that he did not have the requisite certification requirement as specified in Regulation 7(2) of IA regulations,” SEBI said in an order.

Kukreja is the cofounder and CEO of PB Fintech’s lending vertical Paisabazaar.com. 

As per the regulations, an individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations and persons associated with investment advice, shall have a certification on financial planning or fund or asset or portfolio management or investment advisory services either from NISM from any other organisation or institution, including Financial Planning Standards Board of India.

“After taking into consideration the nature and gravity of the violations… as well as considering the aforementioned mitigating factors, I… hereby impose a minimum penalty of 1,00,000 (Rupees One Lakh Only) on Noticee i.e. Paisabazaar Marketing & Consulting Pvt Ltd,” adjudicating officer Soma Majumder said in the order.

If the company fails to pay the fine within 45 days of the receipt of the order,  the markets regulator might initiate “consequential actions”, the order said.

The matter dates back to more than a year ago. BSE Administration and Supervision Ltd  (BASL) conducted the inspection of Paisabazaar for a period between April 21, 2021 and August 31, 2022 in November last year.

The findings of the inspection were sent to Paisabazaar and the company responded to it. However, following the inspection of the finding and the company’s response, it was observed that Kukreja was in violation of the regulations. 

Following the issue of a show cause notice, Paisabazaar claimed that the Covid-19  pandemic restrictions made it difficult for Kukreja to ensure compliance with the regulations. It also said that Kukreja successfully obtained the requisite certification as on September 13 this year and was in full compliance with the regulations.

Considering all the factors into consideration, the markets regulator found Kukreja in violation of the required compliance and levied the fine.

It must be noted that Paisabazaar witnessed impressive growth in the last three reported quarters. In Q3 FY23, the business achieved break-even on an adjusted EBITDA level.

In Q1 FY24, Paisabazaar registered a 53% year-on-year (YoY) growth in loan disbursal and a 47% YoY rise in credit card issuance.

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