Why Chairman of Paytm Payments Bank Vijay Shekhar Sharma Resigned  

The Reserve Bank of India (RBI) enforced a number of restrictions, including a directive for Paytm Payments Bank to cease operations by March 15. The decision came after that

Delhi, New: In the midst of the company’s continuous 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) implemented a number of restrictions, 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 client identity checks and an apparent lack of arm’s-length separation from the parent business, 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 executive director Ashok Kumar Garg, and former chairman of the Central Bank of India Srinivasan Sridhar entering.

Rebuilding the board with executive and independent directors is perceived as Paytm’s attempt to show that it is in accordance 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 agency of Paytm’s dedication to following the law.

What Made Vijay Shekhar Sharma Resign?

Five1% 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 systems, Mr. Sharma said that his departure from the board and the nomination 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.

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Due to the regulatory issues that Paytm is facing, the company’s stock value has significantly decreased after the RBI’s order. The RBI’s extension of the deadline for closing down the payment bank’s activities and Paytm’s collaboration with other banking institutions, however, have been credited with the stock’s revival.

The Action of Nirmala Sitharaman

To address their worries and problems, Fintech industry representatives met with Finance Minister Nirmala Sitharaman on Monday. Two government officials who attended the conference claim that the developments at Paytm Payments Bank were not particularly discussed, as reported by Reuters.

The finance ministry has declared that it will be having talks with Indian law enforcement agencies and fintech companies soon in response to the situation. According to a statement issued by the government, the purpose of this next conference is to enhance communication between fintech companies and other enforcement agencies.

The government and central bank will investigate the ownership structure issues expressed by a few listed fintech companies. This action is indicative of a larger initiative to improve accountability and transparency in the fintech industry.

Furthermore, the government has promised to streamline “know your customer” (KYC) requirements for the fintech industry. Reducing the complexity of KYC standards could facilitate customer onboarding and help fintech companies overcome some of their operational difficulties.