Paytm management-auditor tussle paves way for financial transparency

The tussle between the auditors and the management of Paytm Payments Bank Limited (PPBL) over the "going concern" status of the company shows that corporate governance systems are maturing in India unlike before, when the former were pulled up for not flagging these issues, a senior official told Business Standard.

- RUCHIKA CHITRAVANSHI & AJINKYA KAWALE

The auditors have doubted whether PPBL can continue as a "going concern", given its operational challenges.

Going concern is an accounting term for a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future. Certain expenses and assets may be deferred in financial reports if a firm is assumed to be a going concern.

"If the management is disputing the report, then investors will have to take a call. An informed debate can take place. It is good for the system. The shareholders and investors need to know the true state of affairs on the going concern issue," the official said. Concerns over viability of PPBL, an associate entity of One97 Communications, have arisen after RBI placed crippling restrictions on the company. Operations at the payments bank have come to a standstill after most of its businesses were impacted following the regulator's action.