Fintech executive reviewing document in a modern office, Indian financial district background.
The Securities and Exchange Board of India (SEBI) has issued a show cause notice (SCN) to the key managerial personnel (KMP) of fintech firm Paytm concerning alleged violations of disclosure norms. The notice, dated August 11, questions the timing and classification of a December 2023 announcement as unpublished price sensitive information.
In a filing, Paytm stated that the SCN pertains to the disclosure of information regarding the company’s loan distribution business. Specifically, the announcement detailed Paytm’s decision to scale down its offering of small-ticket loans under INR 50,000, which primarily constituted its postpaid loan business.
Paytm has indicated that it is reviewing the notice and intends to respond to the market regulator within the stipulated two-week period. The company believes the matter will not have any financial impact on its operations.
The December 2023 announcement led to a significant drop in Paytm’s stock price, with shares plunging nearly 19% on the BSE. Following this, several brokerage firms revised their price targets for the company.
While the specific allegations are not fully detailed, SEBI appears to be investigating whether Paytm adhered to timely disclosure requirements for material events and accurately assessed the market impact of the business adjustment. The notice, issued under SEBI (Prohibition of Insider Trading) Regulations, 2015, may also probe the company’s procedures for identifying, maintaining confidentiality of, and controlling insider trading related to significant information.
This development occurs amidst a recent rally in Paytm’s share price, driven by positive Q1 FY27 results and market speculation regarding potential MDR on certain UPI transactions. The company reported a 79% year-on-year increase in consolidated net profit to ₹220 Cr for Q1 FY27, with revenue from operations growing 28% YoY to ₹2,448 Cr.
Paytm shares closed at ₹1,605.5 on the BSE on Wednesday, marking a marginal decrease of 0.16%.
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