Paytm issue may be reviewed, scrutiny on Byju's progressing well: ICAI

Institute of Chartered Accountants of India President Ranjeet Kumar Agarwal on Sunday said its financial reporting review board (FRRB) may deliberate on the Paytm issue. The board, he said, is currently conducting a review of the accounts of ed-tech firm Byju's over alleged governance concerns.

"So far, we have not considered it (Paytm issue), but the board meeting of the FRRB will take place in the near future and it will consider appropriate action if required. So far, we have not decided anything as far as this matter is concerned," ICAI President Ranjeet Kumar Agarwal told news agency PTI.

On January 31, the RBI prohibited Paytm Payments Bank Limited (PPBL) from accepting deposits or top-ups in any customer account, including wallets and FASTags, effective from February 29. The central bank's move came due to regulatory concerns. 

The ICAI president said that the newly-elected committees, including FRRB, of the institute are expected to hold meetings in March. The FRRB may determine whether any scrutiny of the books is necessary over allegations of regulatory lapses and their impact on the payment bank's accounting, he said.

"It is the discretion of the board whom to review and when to do so. It has a robust system," the newly elected ICAI chief said. The board has a three-tier structure -- technical, group, and then finally the board review. It is empowered to review the financial statements of listed companies. "In cases of gross negligence, we proceed with further investigation. If there are minor issues, we provide advisory guidance," Agarwal said.

Asked whether the ICAI was waiting for a complaint regarding Paytm, Agarwal said, "The institute can take cognizance both suo motu and through complaints. In Byju's case, it was suo motu." In the case of Byju's, he said, the progress on the board's scrutiny is "going well and the report is expected by the end of this year". 

Cash-strapped Byju's has also plunged into crisis, with some investors wanting to remove founder and CEO Byju Raveendran. In an Extraordinary General Meeting held on Friday, which was not attended by the founder, investors Prosus, General Atlantic and Peak XV voted to sack CEO Byju Raveendran and his family from the edtech firm.

"At today’s Extraordinary General Meeting, shareholders unanimously passed all resolutions put forward for vote. These included a request for the resolution of the outstanding governance, financial mismanagement, and compliance issues at Byju’s; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the Company," said a spokesperson from Prosus, the investors that led the EGM.

However, a day later, Raveendran affirmed his position as the chief executive officer and underlined stability within the organisation. "I continue to remain CEO, the management remains unchanged, and the board remains the same. Put differently, it is 'business as usual' at Byju’s," he said in his communication to staff.

The six investors, who moved the resolutions, hold more than 32 per cent stake in Think & Learn (T&L), the parent firm of Byju's.

Earlier this week, four investors of Byju's filed a mismanagement suit in the NCLT, seeking the removal of Raveendran from the board of directors. The shareholders filed a mismanagement and oppression suit against Raveendran in a bid to oust him from the firm.

The suit filed by the shareholders also seeks a forensic audit of the company, the appointment of a new board, and the rights issue void.

(With inputs from PTI)