Paytm Money, a subsidiary of Paytm, a leading Paytm in digital financial services, has paid Rs 45.5 lakhs for settlement of allegations of violations of SEBI’s technical disturbances. This payment has been made with the aim of resolving many compliance issues, which will help Paytm Money to avoid long legal process.
In the Settlement Order issued on 13 February, SEBI said that a condolence notice was sent to Paytm Money on 24 July 2024, alleging violation of several rules by the stock broking firm.
Main allegations on Paytm Money
1. Reduction in alert generation on time
According to SEBI, Paytm Money failed to generate alerts at the required time for all critical assets.
- According to the regulatory guidelines, the permitted limit of the alert system should be at least 70%.
- Not being generated on time can end the security of investors’ interests, especially when there is a sudden ups and downs in the market.
- This disturbance raised questions on the company’s operational capacity and risk management process.
2. Accused of not giving peak load data
During the inspection, Paytm failed to submit the necessary documentary evidence related to PEAK Load.
- Peak load data shows how the company suddenly handles the growing market traffic and technical disturbances.
- Not giving this information raised doubts over the company’s infrastructure capacity and technical strength.
3. Missing Critical System
Paytm Money did not connect all its important systems to log analytics and monitoring applications.
- These systems are necessary for real-time monitoring and early identification of possible systems failure.
- This flaw could have affected the credibility of the operation and the security of investors’ assets.
4. not to drill a disaster recovery
Paytm Money did not operate the live disaster recovery (DR) drill during the half from April to September 2023.
- The purpose of the Dr drill is to ensure that the company can restrain its operation quickly in the event of technical failure or disaster.
- Not doing such drills for a long time raised serious questions on the company’s ability to deal with emergency situations.
Relief from agreement, but improvement is necessary
Under the agreement with SEBI, Paytm Money survived long regulatory investigation and potential large fine. However, the company will have to make necessary improvements in its technical and operating processes so that such problems can be avoided in the future.
This case is an important example for financial services companies that it is mandatory to follow the regulatory guidelines to ensure technical compliance and safety of investors.
