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Can A Case Of Criminal Conspiracy, Fraud, And Cheating Should Be Slapped on SEBI And Its Directors?

The eyes are trained to see what’s in front of them and not what’s beyond. This very reason makes scams and frauds around the world successful. But sometimes, it is mere ignorance of the fact. This article is written in a manner to lay down the facts before the readers and let them be the ultimate judge of whether the directors of SEBI be slapped with a case of fraud or not?

Eight months ago, on 1st November 2021, a renowned company in the Fintech Industry, the Paytm branch of One97 communication issued its IPO, which is Initial Public Offering. For a layman to understand, it is an investment instrument, put into play by companies to raise money or capital to carry out their operations. The question which arises is who approves which companies can launch their IPOs and which can’t? Well, a 7-step long process is worked further onto from the 3rd step after permission is granted by none other than SEBI, the security exchange board of India. 


SEBI is governed by a plethora of rules when it comes to IPO. However, before approaching the primary market to obtain money through a new offering of securities, a company must ensure that it conforms with all of the requirements of the SEBI (ICDR) Regulations, 2009. Before the paperwork is filed with SEBI, the Merchant Banker is a professional intermediary registered with SEBI who performs due diligence and guarantees compliance with the ICDR Regulations.




The Securities and Exchange Board of India (SEBI) has established entrance requirements for firms wishing to make a public offering or issue. The same is explained further down in the Entry Norms section. The various entry norms available to an issuer for accessing the capital market via a public offering are referred to as entry norms. They are intended to protect investors by prohibiting enterprises from raising funds if they do not meet the entry standards.

The following provisions must be met by an unlisted issuer making an initial public offering (IPO): Entry Norm I, also referred to as the “Profitability Route.” The one that stands out the most in our piece is that for an IPO to be issued, a minimum of Rs. 15 crores in average pre-tax operational profit in at least three of the prior five years is required.

However, on reading these two norms the question arises of how an infamous company like Paytm has anything to do with it?

Paytm IPO


Well proceeding on, let us analyze Paytm’s profits over the years from the financial year 2020. A subsidiary of One 97 communication, Paytm stepped into the Indian sand in August 2010. It worked hard to establish itself in an era when fintech was emerging in India. The world-class marketing-led it to be established as a brand. And with the initiation of digital India by the government, the company was set with the expectations of soaring the skies. This is backed by the confidential annual report of One97 communication which incorporates a fall in revenue by 14% of the entire parental entity and a major loss of INR 1700 crores at the end of the financial year 2020. To add the cherry on the cake, the losses widened and increased by 41% to INR 2400 crores in the fiscal year 2022. Talk in terms of revenue it was hit hard with a fall of 65% in the fiscal year 2022.

Concluding it all, Paytm experienced loss after loss dueling with analysts’ expectations and enjoying the established brand name to raise money from the investors. But the profit and loss account of One97 communication’s subsidiary Paytm shows a different picture, one that contradicts and puts the directors of SEBI at risk. It shows a tremendous loss over the year and what we can conclude is they are functioning because of the easy investment they are receiving and the recent breakdown of Vijay Shekhar Sharma blares the same. Or are we diving in too deep? Well, whatever the reasons, facts cannot lie. 

This is, however, a single instance. 

Let us dig deeper into it. Shall we? Another popular name from a different industry, the one that is talked about daily in some of the other Indian households, Zomato is no less accomplice in the chain.


On careful analysis of Zomato’s Profit and loss account, a pattern is observed with a dip in the loss in 2021. A pattern of increasing losses with the highest being in 2020 is INR 2451 crores and further narrowing it down. Nevertheless, the losses persist in large volumes. Zomato’s losses in no mystery to anyone and such a company should have been barred from launching the IPO, which on the contrary it did and raised $1.26 billion. These companies are successful in fooling the investors because of their classified names and backings provided by the authorities of the government. 

These two recent cases of SEBI’s either a deliberate indulgence of mere ignorance put lakhs of investor’s money at stake and it raises the question of doing directors of SEBI get something in return for breaking its principles? Should a case be slapped on them? Should an investigation be put up against them? Well, I have acquainted the readers enough to answer that themselves. If the voice is not raised from the beginning of such frauds, it will become a baton carried forward by every other director at play. Economically if I put it down, there exists a chain of reaction to each action starting from incoming investments leading to development in the economy or companies which ultimately are the part of the economy, leading to an increase in production, erasing unemployment, generating high overall income of the country, eventually unswerving to the overall development of the country.  

Therefore, we as a nation need to understand that this trade-off of sitting silently costs us the positively anticipated future of our country, as there is no denying the fact that the foundations of any country are laid down by investment prospects, or else the democratic republic of Congo wasn’t in such poor luck.



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