Amid crisis, Vijay Shekhar Sharma steps down as Paytm Payments Bank chairman

The Reserve Bank has barred the PPBL from accepting deposits and credits from any customer post-March 15 for persistent non-compliances and continued material supervisory concerns in the bank.

New Delhi: Paytm founder and chief executive officer Vijay Shekhar Sharma has quit his position as the chairman of its embattled subsidiary Paytm Payments Bank Limited (PPBL), the company informed in an exchange filing on Monday. 

Sharma owns 51% stake in Paytm Payments Bank while the parent entity holds the rest.

The company has separately constituted its board of directors with multiple independent entrants, including Ex-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 Rajni Sekhri Sibal. The company stated that Sharma’s resignation was decided to enable this transition.

“Their distinguished expertise will be pivotal in guiding us toward enhancing our governance structures and operational standards, further solidifying our dedication to compliance and best practices,” Surinder Chawla, PPBL’s managing director and chief executive officer said in a statement.

The move is intended to restructure the company after the fiasco that unravelled over the past month, and is also a way for Sharma to distance himself from PPBL so that he can continue focusing on the parent company, a source close to the development said on the condition of anonymity. He will continue serving at the helm of Paytm, they added.

In January this year, the Reserve Bank of India asked PPBL to wind up operations of its financial instruments by February 28, which was later extended to March 15, on account of persistent non-compliance with KYC norms. The move was a major blow to the fintech sector, and the Paytm parent company, which has been scrambling to decouple its other businesses from PPBL. Last week, Paytm shifted its nodal account to Axis Bank from Paytm to continue facilitating its transaction business.

Paytm on Monday said that PPBL will commence the process of appointing a new chairman. However, a timeline and possible candidates for this yet remain unclear, as per the source cited above.

For now, the company is focusing on salvaging the situation that has arisen from RBI’s regulatory action, especially as no respite for PPBL to restart operations has yet been communicated by the central bank.

“Everything is chaotic at the moment. Nobody knows what will happen after the 15th (March). We are just waiting and watching right now,” the source said.