Paytm shares trade lower after SEBI warning over related-party transactions with payments bank

The stock was trading 0.9% lower at ₹465.2 on the National Stock Exchange (NSE) at 9:40 am.

In an exchange filing, the financial technology company informed that the warning letter concerns the related party transaction the firm made with Paytm Payments Bank Limited (PPBL), which, according to SEBI, was "without due approval of either the audit committee or the shareholders".

The regulator observed that One 97 Communications had related party transactions (RPTs) worth ₹360 crore which were over and above the approved resolution.

"On one hand, the company claimed that it had provided a cumulative numerical value of the transactions undertaken with PPBL by the Company and its subsidiaries for reference by the shareholders and that transactions between subsidiaries of OCL and PPBL do not qualify as RPTs during the FY 2021-22," SEBI's letter said.

"But, on the other hand, the Board and Audit Committee of the Company have considered transactions between OCL and/or its subsidiaries with PPBL as material RPTs and passed a resolution that RPTs with PPBL will be within the limits as mentioned therein the respective resolutions," the letter added.

SEBI said that it has viewed violations "very seriously" and warned Paytm to be "careful in future" and "improve compliance standard" to avoid recurrence of such instances going ahead, "failing which appropriate enforcement action would be initiated by the law".

There is no impact on financial activities: Paytm

In response to SEBI's warning, the digital payments company said that it is committed to upholding and demonstrating the highest compliance standards.

"There is no impact on financial, operation or other activities of the company pursuant to the above-mentioned letter," Paytm added.