Paytm Payments Bank's Director Resigns Amid Regulatory Scrutiny

By Consultants Review Team Monday, 12 February 2024

In a recent development, Paytm, a prominent Indian fintech company, has confirmed the resignation of an independent director from its banking subsidiary, Paytm Payments Bank. The resignation of Manju Agarwal from the board of Paytm Payments Bank, effective February 1, was attributed to personal commitments, as disclosed by the company in its filing with the stock exchange.

Earlier reports by news agency PTI suggested that Agarwal's resignation followed a directive from the Reserve Bank of India (RBI) to Paytm Payments Bank to scale down the majority of its operations. The regulatory intervention from RBI came in January, raising concerns about the company's adherence to regulatory guidelines.

In response to the regulatory challenges, Paytm had previously announced its plans to establish an advisory committee focusing on compliance and regulatory matters. This week, the company officially formed the Committee, comprising industry professionals such as MM Chitale and R Ramachandran, nominated by RBI. The Committee aims to strengthen compliance and regulatory oversight within the organization.

In a statement, Paytm's parent company, One97 Communications Limited, announced the formation of a Group Advisory Committee, chaired by M Damodaran. This move underscores Paytm's commitment to addressing regulatory concerns and bolstering its compliance framework.

Paytm Payments Bank Limited, a subsidiary of One97 Communications Limited, has been subject to regulatory scrutiny in the past. The Reserve Bank of India had previously imposed restrictions on Paytm Payments Bank for failing to comply with regulatory guidelines. Despite lifting the restrictions later, concerns about regulatory compliance persisted.

Vijay Shekhar Sharma, the founder of Paytm, holds a majority stake in Paytm Payments Bank. The recent resignation of a director and the establishment of a compliance-focused advisory committee signal Paytm's efforts to navigate the regulatory landscape effectively and restore trust among stakeholders.

As Paytm strives to overcome regulatory challenges and strengthen its governance framework, industry observers will closely monitor its progress in ensuring compliance with regulatory requirements.

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