Digital payments firm Paytm said late on Wednesday its top management got a notice from India’s markets regulator over the timing of its 2023 announcement curbing small personal loans following a central bank clampdown.
Paytm’s key management personnel, which include CEO Vijay Shekhar Sharma and CFO Madhur Deora, received the so-called show cause notice from the Securities and Exchange Board of India on Tuesday. They have 14 days to respond to the notice.
The company, in a statement on December 6, 2023, said it would issue fewer sub-50,000-rupee (about $525) personal loans, after the Reserve Bank of India tightened rules on consumer lending.
Paytm’s announcement led to a 20% drop in its shares the next trading day.
About three weeks prior, the RBI had tightened rules for personal loans, in the form of higher capital requirements, amid concerns over a surge in small-value loans. Paytm shares fell about 1.9% after the order before making a recovery over the next few days.
However, in the eight days leading up to Paytm’s December 6 announcement, its shares dropped about 12%.
On Wednesday, Paytm said it does not expect any financial impact from the show cause notice.
SEBI’s show cause notice is meant to seek responses from accused persons and entities in a probe. If upheld, they could face monetary penalties or restrictions under Indian securities regulations.
($1 = 95.3300 Indian rupees)
Reuters
