Paytm Money pays ₹45.5 lakh to settle SEBI rule violations

Paytm Money pays ₹45.5 lakh to settle SEBI rule violations

Paytm Money – Paytm’s subsidiary Paytm Money has deposited a settlement amount of ₹45.5 lakh to settle allegations of violation of rules related to technical glitches leveled by the Securities and Exchange Board of India (SEBI). With this payment, the company has decided to settle several compliance issues, giving it relief from further legal proceedings.

SEBI’s settlement order and allegations

In its settlement order issued on February 13, 2025, SEBI said that a show cause notice was sent to Paytm Money on July 24, 2024. In this, the company was accused of several regulatory violations, the main ones being:

Lack of timely alert generation system for critical assets

Under SEBI rules, it is necessary to get timely alerts, so that the safety of investors can be ensured.

Paytm Money did not set the permissible limit of alert generation at 70%, which could lead to operational risk and harm to the interests of investors.

Failure to submit documentary evidence related to peak load

Paytm Money failed to submit documents proving its infrastructure capacity.

This led to doubts about the market’s ability to deal with sudden traffic surges or technical glitches.

Not connecting critical systems to log analytics and monitoring applications

Log analytics is essential for real-time monitoring and timely detection of potential system failures.

Paytm Money did not connect all critical systems to this system, raising questions about the reliability of the system and the safety of investors’ assets.

Not conducting disaster recovery (DR) drills

No disaster recovery (DR) drills were conducted during April to September 2023.

The purpose of a DR drill is to quickly restore operations in case of a technical failure or disaster.

The lack of a DR drill for a long time raised serious questions about the ability to deal with emergencies.

Relief for Paytm Money, but improvements needed

Through this agreement with SEBI, Paytm Money has escaped a long regulatory investigation and a possible fine. However, the company will have to remove these shortcomings and improve its systems to avoid such problems in the future.

Is this a sign of SEBI’s strictness? What do investors learn from this development? Share your opinion!

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