Khushi Bhuta, Pune
One97 Communications Limited, the parent company of the fintech giant Paytm, has clarified that the resignation of Vijay Shekhar Sharma was made in light of a future transition in reconstituting the board of PPBL. The statement has come into focus as former Paytm Payments Bank Limited (PPBL) Chairman, Vijay Shekhar Sharma, resigned from the position on Monday.
The major decision that consequently contributed to the restructuring of the board was made two weeks before the deadline of 15th March set by the Reserve Bank of India (RBI). Sharma is also the founder and CEO of the company Paytm. Before his resignation, Sharma held the position of a part-time non-executive Chairman and board member of the board of PPBL.
In their official statement, OCL clarified that, “Vijay Shekhar Sharma has resigned from the Board of Paytm Payments Bank to enable this transition. PPBL has informed us that they will commence the process of appointing a new Chairman,” while emphasizing on the importance of a smooth transition for a board to be restructured effectively.
OCL’s shares have hit the upper circuit limits in the last two sessions and have drawn specific attention from brokerages as the company experiences top level management instability and shifting. While at least two brokerages have dropped their coverage of the stock completely, at least 13 analysts have recommended that the stock be kept on ‘hold’ for now.
RBI’s demand ordering Paytm Payments Bank to wind down operations by the 15th of March was made due to compliance and supervisory issues. As per RBI, the reasons for the order included Paytm’s lack of efficient customer identity verifications as well as an insufficient amount of distance from its parent company, Paytm. The RBI pushed back the deadline, which was originally set for February 29, 2024, by 15 days in consideration of providing the company’s customers with a smoother transition.
In the context of this order, the company’s transition into a new board with restructuring of both senior management and non-executive directors can be viewed as a step clearly indicative of compliance with the RBI. The new board of Paytm Payments Bank includes former chairman of the Central Bank of India Srinivasan Sridhar, former executive director of the Bank of Baroda Ashok Kumar Garg, and retired IAS officers Debendranath Sarangi and Rajni Sekhri Sibal.