Paytm Payments Bank Limited (PPBL) is undergoing significant changes in its leadership and governance structure in response to regulatory pressure from the Reserve Bank of India (RBI). Vijay Shekhar Sharma, the founder of Paytm, has resigned as the part-time non-executive Chairman of PPBL ahead of the March 15 deadline set by the RBI.
New Board Members Appointed
PPBL has reconstituted its Board of Directors by appointing individuals with extensive experience in banking and administration. The new members include Srinivasan Sridhar, former Chairman of Central Bank of India, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and former IAS officer Rajni Sekhri Sibal. These appointments aim to bolster governance structures and operational standards within the bank.
Reasons Behind Resignation
Sharma’s decision to step down from his roles within PPBL comes amidst ongoing regulatory scrutiny and concerns over non-compliance issues. With Sharma owning a majority stake in the bank, this move is seen as a strategic step to facilitate a smooth transition and address regulatory concerns effectively.
RBI’s Regulatory Action
The RBI‘s crackdown on PPBL stems from persistent non-compliance issues and material supervisory concerns. The banking regulator has ordered PPBL to cease its banking activities after February 29, later extending the deadline to March 15. This regulatory action prohibits the bank from accepting new deposits, conducting credit transactions, or carrying out certain banking activities.
Future Partnerships
To navigate through these challenges, PPBL is exploring partnerships with established banks like Axis Bank, HDFC Bank, State Bank of India, and Yes Bank. These partnerships would enable PPBL to continue processing transactions via the popular unified payments interface (UPI), ensuring continuity of services for its customers.