Vijay Shekhar Sharma, founder and majority owner of Paytm Payments Bank, stepped down from the troubled unit’s board days after India’s regulator signaled the go-ahead for financial firm Paytm.
Paytm Payments Bank on Monday announced that it has reshuffled the board of Paytm partner Paytm Payments Bank with the appointment of four executives – former Reserve Bank of India governor Srinivasan Sridhar, retired IAS (Indian Administrative Service) officer Debendranath Sarangi , former Bank of Baroda executive director Ashok Kumar Garg and retired IAS Smt Rajni Sekhri Sibal — as independent directors. As part of the move, the bank unit said, Sharma had resigned from the board and also vacated his post as part-time non-executive chairman.
The appointment follows India’s central bank sanctioning Paytm Payments Bank, in which Sharma holds a 51% stake, with strict business restrictions. Most of the restrictions are set to come into effect on March 15. (Paytm held a 49% stake in Paytm Payments Bank.)
TechCrunch reported earlier this month that India’s central bank was weighing ordering a board overhaul at Paytm Payments Bank and the removal of some of the company’s executives, including Paytm founder Sharma.
In 2022, the Reserve Bank of India (RBI) sanctioned Paytm Payments Bank after it found that the Noida-based company had violated rules by allowing data to flow to servers outside India and was not properly verifying its customers.
The RBI said late last month that a comprehensive audit by external auditors had found “persistent” non-compliance and “ongoing significant supervisory concerns” at the bank. The non-compliance, the RBI said, warranted “further supervisory action”. Days later, she reiterated that her actions were “proportionate” to the “gravity of the situation”.
But last week, the banking regulator indicated it was working to limit the damage to Paytm, many of whose transactions were processed by Paytm Payments Bank.
“We believe RBI’s clarification that @paytm UPI manipulations can be seamlessly transferred to other banks (if NPCI grants TPAP approval to Paytm) resolves a major unknown for Paytm (since RBI’s recent action against PPBL),” Goldman Sachs analysts wrote in a note. . “Furthermore, RBI has advised NPCI to consider Paytm’s request to act as a TPAP (to offer UPI). Should such approval be granted, we would expect that Paytm would be able to retain the majority of its MTU base and therefore continue its ability to monetize such users by selling other products.”
