Paytm’s travails with Indian stock markets’ regulatories bodies don’t seem to end.
The Securities and Exchange Board of India (SEBI) has fined Paytm’s board members Rs. 3.3 crore as a part of a settlement deal for violating market norms. The fine was levied for the board’s lapses in abiding with the listing regulations in India. These former directors — all part of Paytm’s then Nomination and Remuneration Committee (NRC) — were accused of violating rules while deciding benefits given to the MD and CEO Vijay Shekhar Sharma and his relatives. In a show-cause notice issued in May 2024, the market regulator had alleged that the NRC had failed to discharge duties with an unbiased and independent approach.
The fines have been levied on Paytm’s independent directors including Saama Capital’s Ashit Ranjit Lilani, former WhatsApp Chief Business Officer Neeraj Arora, Goldman Sachs’ Mark Schwartz, Shardul Amarchand Mangaldas & Co’s Pallavi Shardul Shroff, and non-executive nominee directors Ravi Chandra Adusumalli, Munish Varma and Douglas Feagin, along with Paytm’s then chief compliance officer Amit Khera. The eight individuals — four independent directors, three non-executive independent directors and the compliance officer — had filed for settlement without admitting or denying the findings of fact and conclusions of law.
In a settlement order issued on Friday, Sebi said that independent directors failed to adhere to their responsibilities concerning matters around the benefits to Paytm founder Vijay Shekhar Sharma and his family members. Sebi said that the directors signed documents which carried incorrect statements. SEBI said that directors signed documents which said that the company had no promoter, whereas Sharma was the promoter of the company.
The fine on its board members is Paytm’s latest run-in with Indian regulators. As far back as in 2018, the RBI had directed Paytm Payments Bank to stop adding new customers over concerns over its KYC process and how it stores customer data. Over the next few years, Paytm’s Payments Bank was again pulled up several times over lapses in governance, and its operations were all but shut by the Reserve Bank in early 2024. In February, it had been reported that the Enforcement Directorate was likely to investigate Paytm over non-compliances. In July 2024, Paytm was given an administrative warning by SEBI over old transactions with Paytm Payments Bank, and in May 2024, SEBI had issued a show-cause notice to Paytm over ESOPs given to Vijay Shekhar Sharma. SEBI has now gone ahead and fined Paytm’s board members Rs. 3.3 crore over signing documents that contained inaccurate information while deciding the benefits to be given to Sharma and his relatives. It’s a pattern that could worry Paytm and its investors — in spite now being a listed company that was founded over 15 years ago, it still doesn’t seem to be able to comply with the regulations that are mandated by the country’s regulatory agencies.