On Monday, Paytm announced that its founder, Vijay Shekhar Sharma, will relinquish his roles as non-executive chairman and board member of its payments bank division. This move comes as part of a larger restructuring effort in response to regulatory scrutiny from the central bank.
The decision to restructure Paytm Payments Bank was prompted by “significant supervisory concerns”, which included issues with customer identity verification and an insufficient separation between Paytm and its banking unit, according to unnamed sources.
Following regulatory pressure, the Reserve Bank of India has directed the banking unit to cease operations by March 15 due to ongoing non-compliance and serious supervisory concerns, leading to a significant drop in Paytm’s share price.
Vijay Shekhar Sharma resigns as chairman of Paytm Payments Bank
As part of the restructuring, Srinivasan Sridhar, former chairman of Central Bank of India, Ashok Kumar Garg, ex-Executive Director of Bank of Baroda, and two retired Indian Administrative Service officers will join the board, as per Paytm’s disclosure to the exchange.
The fresh influx of expertise on the board is expected to be “crucial in driving improvements in our governance frameworks and operational standards, reinforcing our commitment to compliance and best practices”, stated Surinder Chawla, CEO of Paytm Payments Bank.
In a related development, Paytm has backed its banking unit’s decision to constitute a board composed solely of independent and executive directors, removing its nominee in the process. It further stated that Sharma’s departure from the board is aimed at facilitating this transition.
Vijay Shekhar Sharma holds a majority stake of 51% in Paytm Payments Bank, while the remainder is owned by One 97 Communications, the official name for Paytm.
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