Embattled digital payments firm Paytm said on Monday that Vijay Shekhar Sharma would step down as non-executive chairman and board member of its payments bank’s unit in a major overhaul following 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 non-compliances and continued material supervisory concerns, triggering a meltdown in Paytm’s stock.
The action against the payments bank unit followed “serious supervisory concerns”, including inadequate customer identity and a lack of arms-length distance with Paytm, sources previously told Reuters.
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 board, Paytm said in an exchange filing on Monday.
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”.
Sharma owns a 51% stake in Paytm Payments Bank, while 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.
While the RBI extended an initial deadline to wind down operations, it has not communicated any decision to revoke the payment bank unit’s licence.
Reuters