Table of contents
In a recent development, Paytm founder Vijay Shekhar Sharma resigned as chairman of Paytm Payments Bank (PPBL). This action follows regulatory scrutiny and the Reserve Bank of India's (RBI) directive to reorganise the bank's board due to ongoing noncompliance issues.
Source: (1)
Source: (2)
The RBI intervened following a detailed system audit report and subsequent compliance validation, which revealed continuous non-compliance and supervisory concerns at PPBL.
As a result, the central bank prohibited the bank from receiving new deposits or executing credit operations after February 29, with the deadline later extended to March 15.
Sharma resigned as part-time non-executive chairman and board member of PPBL to allow for the board's reconstitution. Paytm's parent company, One97 Communications Ltd, acknowledged Sharma's resignation and announced intentions to nominate a new chairman for the PPBL.
Former Central Bank of India Chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and retired IAS officer Rajni Sekhri Sibal have all been appointed to the PPBL board.
These new board members bring a range of experience and skills that will help guide PPBL towards better governance structures and operational standards.
Meanwhile, the RBI has asked the National Payments Corporation of India (NPCI) to consider One97 Communication's proposal to become a third-party application provider for UPI payments on the Paytm app.
This step demonstrates Paytm's efforts to maintain the continuity of its operations and promote a smooth transfer amidst regulatory hurdles. The departure of Vijay Shekhar Sharma highlights the need for regulatory compliance and governance in the fintech industry.
While Sharma's decision is a huge step forward for PPBL, it also emphasises the importance of fintech companies following regulatory requirements and promptly responding to supervisory concerns.
As PPBL navigates these regulatory obstacles, the recruitment of experienced individuals to its board demonstrates a commitment to improving compliance and implementing best practices.
With regulatory scrutiny rising in the financial services sector, Paytm's initiatives to strengthen governance and compliance standards are critical to retaining stakeholder trust and credibility.
Vijay Shekhar Sharma's departure as chairman of PPBL reflects the changing regulatory landscape and emphasises the significance of regulatory compliance in the fintech sector.
As PPBL transitions to new leadership, a focus on governance, compliance, and operational excellence will be critical to ensuring long-term growth and resilience in an increasingly regulated environment.
