Vijay Shekhar Sharma, the visionary behind Paytm, has recently announced his decision to resign from his role as the part-time non-executive Chairman of Paytm Payments Bank Limited (PPBL). Consequently, there have been changes made to the composition of the board of PPBL, as per reports.
This development comes amidst regulatory action taken by the Reserve Bank of India (RBI), which has directed PPBL to cease accepting deposits and credits from customers beyond March 15. The RBI’s decision stems from concerns regarding persistent non-compliance and ongoing supervision issues within the bank.
Vijay Shekhar Sharma Resigns
Vijay Shekhar Sharma, the founder of Paytm, has stepped down from his role as part-time non-executive Chairman of Paytm Payments Bank Limited (PPBL) before the March 15 deadline to shut down its operations.
PPBL has made changes to its Board of Directors by adding Srinivasan Sridhar, who previously served as Chairman of Central Bank of India, Debendranath Sarangi, a retired IAS officer, Ashok Kumar Garg, former Executive Director of Bank of Baroda, and Rajni Sekhri Sibal, a former IAS officer. This update was announced by One 97 Communications Limited in a regulatory filing on Monday.
Paytm’s Board Reshuffle
PPBL has undergone a significant restructuring of its Board of Directors, as revealed in a recent regulatory filing made by Paytm. The board welcomes the addition of distinguished individuals including Srinivasan Sridhar, formerly of the Central Bank of India, Debendranath Sarangi, a retired IAS officer, Ashok Kumar Garg, who served as the former Executive Director of Bank of Baroda, and Rajni Sekhri Sibal, a former IAS officer.
According to the statement, these accomplished professionals have been appointed as Independent Directors, bringing their expertise and insight to the company’s governance. Notably, Vijay Shekhar Sharma, the prominent figure behind the Paytm brand, has voluntarily resigned from the board of PPBL to facilitate this transition, marking a significant milestone for the organization.
Moreover, the regulatory filing highlights that One 97 Communications Ltd (OCL) is the owner of the Paytm brand, reaffirming its association with PPBL. The filing also indicates that PPBL will initiate the process of identifying a new Chairman to lead the board, signaling a new chapter in the bank’s leadership.
Paytm Payments Bank Boosts Governance
Vijay Shekhar Sharma primarily owns 51% of Paytm Payments Bank, with the remaining owned by One 97 Communications, the formal name for Paytm.
According to Surinder Chawla, CEO of Paytm Payments Bank, the expertise of the new board members will play a crucial role in improving governance and operational standards, emphasizing compliance and best practices.
This decision comes at a time when the RBI is taking action against the payments bank due to ongoing issues with compliance and supervision. The RBI initially instructed the fintech firm to halt banking activities by February 29, but later extended the deadline to March 15.
In a statement on its website, the RBI cited a comprehensive audit report and subsequent compliance validation report from external auditors, highlighting persistent non-compliance and significant supervisory concerns within the bank, necessitating further regulatory action.
RBI Restrictions and Potential Partnerships
The RBI announced that the bank can’t accept more deposits or do credit transactions or top-ups on customer accounts, prepaid cards, or wallets for road tolls. But, they can still give interest, cashbacks, or refunds.
The struggling company might team up with Axis Bank, HDFC Bank, State Bank of India, and Yes Bank to process transactions through the widely used UPI, as reported by Reuters.
Vijay Shekhar Sharma Resigns FAQs
Q.1. Why did Vijay Shekhar Sharma resign from Paytm Payments Bank?
Ans. Vijay Shekhar Sharma resigned as part-time non-executive Chairman of Paytm Payments Bank due to regulatory action by the RBI and the bank’s compliance issues.
Q.2. Who are the new board members of PPBL?
Ans. The new board members of PPBL include Srinivasan Sridhar, Debendranath Sarangi, Ashok Kumar Garg, and Rajni Sekhri Sibal, bringing extensive expertise from the banking and administrative sectors.
Q.3. What changes have been made to the board composition?
Ans. The board of PPBL has undergone significant restructuring with the addition of independent directors, following Vijay Shekhar Sharma’s resignation and regulatory directives.
Q.4. How will the restructuring impact PPBL’s operations?
Ans. The restructuring aims to enhance governance and operational standards at PPBL, aligning with compliance requirements and best practices to address regulatory concerns.
Q.5. What are the implications of RBI’s regulatory action on Paytm Payments Bank?
Ans. The RBI’s regulatory action restricts PPBL from accepting new deposits or conducting certain transactions, prompting a strategic shift towards potential partnerships with other banks like Axis Bank, HDFC Bank, State Bank of India, and Yes Bank for transaction processing via UPI.
