Paytm’s CEO quits payments bank board in major shakeup

BENGALURU: Embattled digital payments firm Paytm CEO Vijay Shekhar Sharma would step down as non-executive chairman and board member of its payments bank unit, as part of a major board overhaul that follows a central bank clampdown.

The Reserve Bank of India (RBI) had asked Paytm Payments Bank to wind down operations by March 15 due to persistent compliance issues and supervisory concerns, triggering a meltdown in Paytm’s stock.

The action against the payments bank unit followed concerns including inadequate customer identity checks and a lack of arms-length distance from parent company Paytm.

Srinivasan Sridhar, former chairman of state-owned Central Bank of India, former Bank of Baroda Executive Director Ashok Kumar Garg and two retired Indian Administrative Service officers will join the payments bank’s board, Paytm said in an exchange filing.

The new board members’ expertise will be “pivotal in guiding us toward enhancing our governance structures and operational standards”, Paytm Payments Bank CEO Surinder Chawla said.

Paytm supports its banking unit’s move of opting for a board with only independent and executive directors by removing its nominee, it said, adding Sharma was also stepping down from the board to “enable the transition”.

Paytm Payments Bank may have reconstructed the board to “salvage the situation” and show the RBI that they are ready to comply with norms, a source aware of the development said. The RBI did not ask it to reconstruct the board, the source added.

Sharma, who is also CEO at Paytm, owns a 51% stake in Paytm Payments Bank. One 97 Communications, as Paytm is formally known, owns the rest.

Paytm Payments Bank, which will start the process of appointing a new chairman, has also seen two independent directors step down since December for reasons other than the restrictions placed on the unit.

Paytm’s stock has recovered nearly 35% after hitting a record low earlier this month in the wake of the RBI action, as it signed a new banking partner and the RBI extended an initial deadline to wind down the payment bank’s operations.

It was reported that Paytm was likely to partner with four banks for processing transactions via the popular unified payments interface, days after the RBI moved to ensure continuity of those transactions. The RBI has not communicated any decision on the payment bank unit’s licence.