Paytm founder Vijay Shekhar Sharma has resigned as the part-time non-executive Chairman and stepped down from the board of Paytm Payments Bank ahead of a major overhaul. This follows recent regulatory action on the bank by the Reserve Bank of India (RBI) over continued non-compliance with guidelines.
The RBI Crackdown on Paytm Payments Bank In February 2024, the RBI barred Paytm Payments Bank from onboarding new customers citing “material supervisory concerns” observed in the bank. The regulator also ordered the bank to appoint an IT audit firm to conduct a comprehensive system audit.
This regulatory clampdown comes after repeated instances over the past few years where Paytm Payments Bank failed to comply with RBI guidelines and was forced to halt new registrations temporarily.
Key Reasons Behind Vijay Shekhar Sharma’s Resignation Industry experts see Sharma’s resignation as a key step to facilitate Paytm Payments Bank’s planned overhaul including a major restructuring of its board composition. By stepping down, Sharma has paved the way for the entry of new independent directors who can guide the payments bank towards better governance and compliance as it looks to win back the RBI’s confidence.
The payments bank has already brought former senior bankers and retired bureaucrats on board in recent weeks. These new appointees are expected to help review internal processes and ensure strict adherence to central bank directions.
What Lies Ahead for Paytm Payments Bank Paytm Payments Bank aims to rapidly comply with RBI’s latest observations and lift the ban on onboarding new customers. Resolving long-standing compliance issues under the newly constituted board and improving overall governance remain top priorities.
The payments bank also needs to conduct a root cause analysis and fix accountability for the repeated compliance failures under Sharma’s leadership. Tighter controls and robust systems will also have to be implemented to satisfy the RBI.
