In the midst of the company’s ongoing legal troubles, Paytm CEO Vijay Shekhar Sharma announced his resignation on Monday as non-executive chairman and board member of Paytm Payments Bank. The move comes after the Reserve Bank of India (RBI) imposed a number of measures, such as mandating that Paytm Payments Bank cease operations by March 15 in response to ongoing supervisory concerns and compliance issues.
A number of issues, including insufficient customer identity checks and an apparent lack of arm’s-length separation from the parent company, Paytm, led to the RBI taking action against the payments bank. Due to these problems, the payments bank’s board saw a significant change, with two retired Indian Administrative Service (IAS) officers, former Bank of Baroda director of operations Ashok Kumar Garg and former chairman of the Central Bank of India Srinivasan Sridhar, joining.
Rebuilding the board with executive and independent directors is perceived as Paytm’s attempt to show that it is in compliance with regulations and turn the ship around. Although the board reconstruction was not specifically required by the RBI, it is believed that the action was taken to reassure the regulatory body about Paytm’s dedication to following the law.
51% of Paytm Payments Bank is owned by Mr. Sharma, with the remaining 49% being owned by One 97 Communications, the company that used to be known as Paytm. In order to facilitate a smooth transition and improve governance structures, Mr. Sharma claimed that his departure from the executive committee and the selection of independent directors were calculated moves. The action is also perceived as an effort to separate Paytm from its payments bank division and establish it as a stand-alone company.
Due to the regulatory issues that Paytm is facing, the company’s stock value has significantly decreased since the RBI’s order. The RBI’s extension of the deadline for closing down the payment bank’s operations and Paytm’s collaboration with new banking institutions, however, have been credited with the stock’s recovery.
To address their worries and problems, Fintech industry representatives met with Finance Minister Nirmala Sitharam on Monday. Two government officials who attended the meeting claim that the developments at Paytm Payments Bank were not especially discussed, as reported by Reuters.
The finance ministry has declared that it will be having talks with Indian law enforcement organizations and fintech companies soon in response to the crisis. According to a statement issued by the ministry, the purpose of this upcoming meeting is to improve communication between fintech companies and various enforcement agencies.
The government and central bank will investigate the ownership structure concerns expressed by a few listed fintech companies. fintech industry.
Furthermore, the government has promised to streamline “know your customer” (KYC) requirements for the fintech industry. Reducing the complexity of KYC requirements could facilitate user onboarding and help fintech companies overcome some of their operational difficulties.
