SEBI Sends Notice to Paytm CEO and CFO Over 2023 Small Loan Disclosure

Paytm, a digital payments startup, announced on August 12 that the timing of their statement in 2023 restricting small personal loans following a central bank clampdown was questioned by India's markets regulator. The Securities and Exchange Board of India (SEBI) issued the so-called show cause notice to Paytm's senior executives on August 11th.

This includes CEO Vijay Shekhar Sharma and CFO Madhur Deora. They are given a 14-day period to reply to the notification. On December 6, 2023, the business announced that it will reduce the number of personal loans that were less than INR 50,000 (about $525). Following the Reserve Bank of India's stricter regulations on consumer lending, Paytm issued this announcement.

Why SEBI Issued Notification to Paytm?

Banks and NBFCs that offered unsecured consumer loans had their risk weights increased by the RBI. Therefore, bringing up worries about the accumulation of systemic risks due to the fast expansion of this type of lending. The SEBI is investigating Paytm to see if the company's leadership timely informed investors of the cutbacks in loan issuing.

Additionally, SEBI raised concerns about whether the timing of the announcement was in line with regulations pertaining to the securities market. An order to show cause does not constitute an accusation of misconduct. Before SEBI decides whether a breach happened, it offers the receivers a chance to react to the regulator's claims. Executives may be subject to fines or other regulatory action if SEBI determines that there was a violation of securities laws or disclosure requirements. Paytm has stated that it is not anticipating any financial damage from the proceedings at this time.

Delhi HC Directs Paytm Payments Bank

Paytm Payments Bank is being wound up per the Delhi High Court's ruling. A former officer from the State Bank of India was also named official liquidator by the court. As a result, this is the last stage in shutting down the payments bank after a protracted regulatory onslaught.

According to a statement released by the RBI on July 28, 2026, the High Court of Delhi has ordered the winding up of Paytm Payments Bank under the provisions of the Banking Regulation Act, 1949, read with the Companies Act, 2013, as per orders of July 8, 2026, and July 22, 2026, respectively.

One 97 Communications, a digital payments company, owns Paytm Payments Bank (PPB), an affiliate firm of the Paytm app pushed by Vijay Shekhar Sharma. Following the RBI's March 2022 directive to the PPB to cease onboarding new customers, the bank was subject to heightened regulatory scrutiny on supervisory concerns. Because of ongoing problems with noncompliance, the RBI prevented the bank from taking new deposits in January 2024.