Yahoo Finance Billionaire Fintech Founder Sharma Quits Board of Embattled Paytm Bank
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Billionaire founder Vijay Shekhar Sharma resigned from Paytm Payments Bank Ltd.’s board less than a month after India’s banking regulator slapped new curbs on it that have disrupted his entire fintech empire.
The 45-year-old entrepreneur also stepped down as a part-time non-executive chairman, according to a filing Monday from One97 Communications Ltd., which owns 49% of the bank.
Sharma’s moves come after the Reserve Bank of India in January prohibited the bank from accepting new deposits in its customer accounts or wallets, threatening the bulk of payments and financial services offered by One97’s various fintech operations. The watchdog imposed the strictures after years of warning the flow of money and data traffic between the tightly regulated bank and the rest of the Paytm universe created accounting and supervisory problems, Bloomberg News previously reported.
Sharma remains the chief executive officer of Paytm, an Indian fintech pioneer that is publicly traded as One97. He separately holds a 51% stake in the payments bank, which can take deposits of as much as 200,000 rupees ($2,400) but cannot lend, and is supposed to function at an arm’s length from the listed firm.
As part of its restructuring, the bank reconstituted its board. It appointed four new directors, including a former chairman of state-run Central Bank of India Ltd and two retired bureaucrats, according to the One97 statement.
One97 removed its nominee from Paytm Payment Bank’s board and said it supports the “move of opting for a board with only independent and executive directors.”
It was not immediately clear if Sharma’s decision will influence the RBI, which has thus far refused to review its orders and has considered canceling the bank’s operating license, Bloomberg reported this month.
One97 shares have declined by 44% since the Jan. 31 RBI order as the bank was the backbone of much of the fintech’s payments and financial services. Paytm has since partnered with Axis Bank Ltd. to support its merchant payments settlement business.
Separately, the RBI has asked the National Payments Corporation of India to consider Paytm’s request to become a platform for peer-to-peer payments so that its business can continue while the restrictions on the bank remain.
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