In a strategic move amidst regulatory pressure, Vijay Shekhar Sharma, the renowned founder of Paytm, has officially stepped down from his role as the non-executive chairman and board member of Paytm Payments Bank (PPB). The decision comes in the wake of stringent directives from the Reserve Bank of India (RBI) mandating the winding down of Paytm’s banking operations by March 15, citing persistent non-compliance and substantial supervisory concerns.
The announcement was made by Paytm on Monday, signaling a pivotal moment in the company’s structural realignment to adhere to regulatory mandates. A regulatory filing quoted by PTI stated, “The company has been separately informed that Vijay Shekhar Sharma has also resigned from the Board of Paytm Payments Bank to enable this transition. PPBL has informed us that they will commence the process of appointing a new Chairman.”
The RBI’s intervention and subsequent orders have led to a noticeable decline in Paytm’s stock value, underlining the gravity of the situation. Consequently, Paytm is actively engaged in reshaping its board composition to address regulatory concerns and ensure robust governance frameworks.
As part of this restructuring, Srinivasan Sridhar, former Chairman of the state-owned Central Bank of India, and Ashok Kumar Garg, former Executive Director of Bank of Baroda, alongside two retired Indian Administrative Service officers, are set to join Paytm’s board, as per an exchange filing by the company. Surinder Chawla, CEO of Paytm Payments Bank, emphasized the pivotal role that the incoming board members will play in steering the company towards bolstering its governance structures and operational standards.
This move underscores Paytm’s commitment to compliance and adherence to best practices, even in the face of regulatory challenges. In response to the regulatory mandate, Paytm expressed its support for the decision of its banking unit to transition towards a board comprising solely independent and executive directors. The decision to have Vijay Shekhar Sharma step down from the board is a strategic maneuver aimed at facilitating a smooth transition amidst regulatory pressures.
The development marks a critical juncture for Paytm as it navigates through regulatory hurdles while maintaining its position as a prominent player in India’s financial technology landscape. Paytm’s proactive approach towards regulatory compliance reflects its commitment to upholding integrity and transparency in its operations. The transition underscores the evolving regulatory landscape in India’s fintech sector and emphasizes the imperative for companies to align with regulatory frameworks to ensure long-term sustainability and growth in the dynamic market environment.