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In a significant move within India’s fintech landscape, Vijay Shekhar Sharma, the founder of Paytm, has relinquished his role as the part-time non-executive Chairman of Paytm Payments Bank Limited (PPBL). This development comes as PPBL faces mounting pressure from regulatory authorities and a mandate to wind down its operations by March 15.
The announcement, made through a regulatory filing by One 97 Communications Limited, the parent company of Paytm, outlined a reconstitution of PPBL’s Board of Directors. Among the newly appointed members are distinguished individuals such as Ex-Central Bank of India Chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and former IAS officer Rajni Sekhri Sibal.
With Vijay Shekhar Sharma’s departure from the board, PPBL will commence the process of appointing a new Chairman. Sharma, who holds a majority stake in Paytm Payments Bank, has also resigned from the board, facilitating this transition.
In response to these changes, Paytm Payments Bank CEO Surinder Chawla emphasized the expertise of the new board members, highlighting their role in enhancing governance structures and operational standards. Chawla reiterated the bank’s commitment to compliance and best practices amid regulatory scrutiny.
The decision to shake up the leadership comes amidst a crackdown by the Reserve Bank of India (RBI) on PPBL due to persistent non-compliance and supervisory concerns. The RBI had directed the fintech firm to cease banking activities after February 29, subsequently extending the deadline to March 15.
Citing comprehensive system audits and compliance validation reports from external auditors, the RBI expressed ongoing concerns about non-compliance and supervisory issues within the bank. As a result, PPBL is prohibited from accepting further deposits, conducting credit transactions, or topping up customer accounts, prepaid instruments, wallets, or cards for paying road tolls. However, the bank can continue to credit interest, cashbacks, or refunds as necessary.
Amid the regulatory challenges, reports suggest that Paytm is exploring partnerships with leading banks such as Axis Bank, HDFC Bank, State Bank of India, and Yes Bank for processing transactions via the unified payments interface (UPI). This move could potentially mitigate some operational hurdles faced by Paytm Payments Bank.
The developments at Paytm Payments Bank underscore the evolving regulatory landscape in India’s fintech sector and the imperative for stringent compliance measures. As the company navigates these challenges, attention turns to the forthcoming leadership transition and its impact on the future trajectory of Paytm’s banking endeavors.
Sources By Agencies
