Paytm Money Settles Regulatory Issues with SEBI, Pays Rs 45.5 Lakh Fine
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Synopsis
The Securities and Exchange Board of India (SEBI) has approved a settlement with Paytm Money, which has paid Rs 45.5 lakh to address regulatory violations, avoiding further legal actions.
Key Takeaways
- Paytm Money fined Rs 45.5 lakh by SEBI.
- Settlement prevents further legal issues.
- Failure to meet alert thresholds noted.
- Concerns over risk management practices.
- Neglected disaster recovery drill.
Mumbai, Feb 13 (NationPress) The Securities and Exchange Board of India (SEBI) issued a settlement order regarding Paytm Money after the firm remitted Rs 45.5 lakh to address claims of regulatory breaches.
This settlement allows the financial services entity to circumvent further legal actions pertaining to the matter.
The issue stemmed from a show-cause notice delivered by SEBI to Paytm Money on July 24, 2024, citing non-compliance with the regulator's technical malfunction framework.
SEBI charged the company with not following essential operational and regulatory protocols aimed at guaranteeing seamless and secure trading practices.
One of the primary issues highlighted by SEBI was Paytm Money’s failure to maintain the mandatory 70 percent threshold for sending timely alerts for critical assets.
These alerts are vital for safeguarding investor interests, particularly during times of market fluctuations.
The inability to fulfill this criterion raised questions concerning the company's risk management strategies.
Moreover, the markets regulator noted that Paytm Money failed to provide essential documentation regarding the peak load on its systems during the review period.
This raised alarms about the company’s infrastructure and its capability to manage elevated trading volumes amid market spikes or technical difficulties.
Another concern brought to light by the regulator was Paytm Money’s neglect in linking all its critical systems to the Log Analytics and Monitoring Application, a necessary tool for real-time performance monitoring and early detection of potential failures.
The lack of this connection posed a threat to operational stability and investor protection.
Additionally, the firm was found to have missed a compulsory disaster recovery (DR) drill between April and September 2023.
Such drills are crucial for ensuring a company’s swift recovery from technical failures or disruptions.
SEBI remarked that Paytm Money’s prolonged absence of a live drill indicated deficiencies in its emergency preparedness.
