Won't allow a 'Paytm type of contamination' in market, assures Sebi's Madhabi Puri Buch

"We will always our KRA sitting in the middle to make sure things are validated", said Sebi's Madhabi Puri Buch

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26 Aug, 2025 12:21

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Capital market regulator's chairperson Madhabi Puri Buch assured of adequate oversight to ensure no 'contamination' similar to what had emerged at payments aggregator Paytm will be allowed in the system.

In a strongly-worded rebuke of payments aggregator Paytm's recent mismanagement, Sebi chairperson Madhabi Puri Buch on July 30 said at an event in Mumbai, "We will not allow a Paytm type of contamination in our market. We all saw what happened in Paytm. Now, because in banking there is no KRA type system, a Paytm like problem stays in Paytm, it does not contaminate other banks. But if we allow Paytm to come into our system with no KRA, and it contaminates the whole system, how can we allow that?"

The central bank had earlier this year ordered Paytm to halt much of its business activities, after it found persistent non-compliance at Paytm Payments Bank. As a result, it was restricted from onboarding new customers and taking fresh deposits after February 29.

Paytm's omissions involved violation of KYC norms and non-compliance with RBI's rules. On many occasions, the compliance submitted by Paytm Payments Bank turned out to be incorrect upon verification by both RBI and external auditors.

"We will always our KRA sitting in the middle to make sure things are validated, otherwise you can have one mischievous player come in and contaminate the whole system. We will not allow that," Sebi chairperson added.

Paytm was also issued an administrative warning on July 15 by Sebi for transactions done in FY22 with its banking unit Paytm Payments Bank. The Securities and Exchange board of India, in a letter dated July 15, had said that some transactions between Paytm and Paytm Payments Bank were conducted without approval from the company's audit committee or shareholders.

The administrative warning involved two transactions of an unapproved amount of Rs 324 crore and Rs 36 crore each. Paytm had responded by saying it consistently acted in compliance with regulation.