Paytm management gets Sebi notice over timing of 2023 disclosure on curbing small-value loans

Paytm said in an exchange filing late on Wednesday that its senior executives received a show cause notice from the markets regulator over the timing of its 2023 announcement curbing small personal loans and its classification as unpublished price sensitive information.

The digital payments company'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 (Sebi) on Tuesday. They have 14 days to respond to the notice.

“The company’s key managerial personnel have received a show cause notice dated August 11, 2026 from the Securities and Exchange Board of India regarding the timing of disclosure of certain information and its classification as unpublished price sensitive information, concerning the company’s corporate announcement dated December 06, 2023,” the exchange filing read.

No financial impact on the firm

In the BSE disclosure, the company also noted that it does not expect any financial impact from the show cause notice. Paytm is listed under the company name One 97 Communications Limited on stock exchanges.

The notice comes at a time when Paytm's stock has been on a strong upward trajectory. Supported by optimism around the government's consideration of a possible merchant discount rate (MDR) on select UPI transactions and robust Q1 FY27 earnings, the company's shares have gained nearly 20% in the past one month and is up around 24% on a year-to-date (YTD) basis.

What was the announcement?

The company, in a statement issued on December 6, 2023, said that it would scale back the distribution of personal loans below ₹50,000-rupee, after the Reserve Bank of India (RBI) tightened norms for consumer lending.

"On the back of recent macro development and regulatory guidance, in consultation with lending partners, in line with its continued focus on driving a healthy portfolio, the company has recalibrated the portfolio origination of less than ₹50,000, which is prominently the postpaid loan product and will now be a smaller part of its loan distribution business going forward," the company said in a media statement back then.

The announcement triggered a sharp market reaction, with Paytm’s shares falling about 20% in the following trading session.

About three weeks prior to Paytm's announcement, the central bank had tightened rules for personal loans by increasing capital requirements amid concerns over a surge in small-value loans. Paytm shares initially fell about 1.9% after the RBI move, but recovered over the next few trading sessions.

However, in the eight days leading up to Paytm's December 6 announcement, its shares dropped about 12%, according to a Reuters report.

A Sebi's show-cause notice is issued to seek explanations from accused persons and entities in a probe. If the regulator concludes that there has been a violation of securities regulations, those involved could face monetary penalties or other regulatory restrictions.