Mumbai, Feb 13 The Securities and Exchange Board of India (SEBI) on Thursday passed a settlement order against Paytm Money after the company paid Rs 45.5 lakh to resolve allegations of regulatory violations.
The settlement order allows the financial services firm to avoid further legal proceedings related to the issue.
The case originated from a show-cause notice issued by SEBI to Paytm Money on July 24, 2024, over non-compliance with the regulator’s technical glitch framework.
The regulator had accused the company of failing to adhere to key operational and regulatory guidelines designed to ensure smooth and secure trading operations.
One of the main concerns raised by SEBI was Paytm Money’s inability to maintain the required 70 per cent threshold for generating timely alerts for critical assets.
These alerts play a crucial role in protecting investor interests, especially during periods of market volatility.
The failure to meet this requirement raised doubts about the company's risk management practices.
Additionally, the markets regulator found that Paytm Money had not provided necessary documentation regarding the peak load on its systems during the inspection period.
This raised concerns about the company's infrastructure and its ability to handle high trading volumes during market surges or technical issues.
Another issue flagged by the regulator was Paytm Money’s failure to connect all its critical systems to the Log Analytics and Monitoring Application, a tool essential for real-time tracking of system performance and detecting potential failures.
The absence of this connection posed a risk to operational stability and investor security.
Further, the company was found to have skipped a mandatory disaster recovery (DR) drill between April and September 2023.
These drills are vital for ensuring a company’s ability to recover quickly from technical disruptions or system failures.
SEBI mentioned that Paytm Money’s failure to conduct a live drill for an extended period suggested gaps in its preparedness for emergencies.
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