ICAI May Scrutinize Paytm's Books Following Byju's Review, Says President Agarwal

26 Feb 2024 , 09:01 AM

In the midst of the unfolding crisis surrounding Paytm Payments Bank Ltd, President Ranjeet Kumar Agarwal of the Institute of Chartered Accountants of India (ICAI) stated that the institution’s Financial Reporting Review Board (FRRB) may soon address issues concerning the fintech firm.

Currently, the FRRB, a statutory body, is engaged in reviewing the accounts of tech-based education unicorn Byju’s due to alleged governance concerns. According to Agarwal, this review process is progressing smoothly.

Agarwal mentioned in an interview with PTI that while the Paytm issue hasn’t been addressed yet, the FRRB is scheduled to convene in the near future to deliberate on it and take appropriate action if necessary. He clarified that no decisions have been made regarding the matter thus far.

The newly elected committees of the ICAI, including the FRRB, are expected to commence meetings from March onwards, Agarwal added.

It’s worth noting that the Reserve Bank of India (RBI), the banking sector regulator, has already imposed restrictions on Paytm Payments Bank Ltd due to purported regulatory concerns. Agarwal suggested that the FRRB might decide whether scrutiny of the books is warranted concerning allegations of regulatory lapses and their potential impact on the payment bank’s accounting practices.

Agarwal emphasized that the FRRB has the discretion to decide whom to review and when to conduct such reviews, backed by a robust system.

Responding to inquiries about ICAI’s approach to complaints regarding Paytm, Agarwal explained that the institute can take action both suo motu and in response to complaints. He cited the Byju’s case as an example of a suo motu action, stating that progress on the board’s scrutiny is on track, with the report expected by year-end.

Regarding the FRRB’s structure, Agarwal outlined a three-tier system consisting of technical, group, and board review levels. He noted that the FRRB is authorized to review the financial statements of listed companies and can initiate further investigation in cases of gross negligence while providing advisory guidance for minor issues.

Established in July 2002, the FRRB plays a vital role within the ICAI, aiming to enhance financial reporting practices to bolster investor confidence in audited statements.

Meanwhile, conflict between investors and the founder of Byju’s has escalated over alleged mismanagement and governance issues. Investors, holding more than 32% stake in Think & Learn (T&L), the operating entity of Byju’s, voted for a leadership change during an Extraordinary General Meeting and subsequently filed petitions with the National Company Law Tribunal (NCLT).