In a significant turn of events, New Delhi-based Paytm Payments Bank (PPBL) has announced the resignation of its managing director and CEO, Surinder Chawla. According to a regulatory filing made on Tuesday, Chawla, who has been at the helm of the digital bank’s operations, is set to leave the company citing personal reasons and seeking better career prospects. The exit of this key executive is set against the backdrop of recent challenges faced by the bank, including actions taken against it by the Reserve Bank of India (RBI).
Chawla’s departure is marked for June 26, 2024, effective at the close of business hours, unless an agreement for an earlier or later date is reached by mutual consent. His decision to step down is the latest in a series of upheavals that the bank has experienced. Chawla’s tenure with PPBL began in January of the previous year, following the central bank’s approval for the payments bank to operate.
The RBI had initially directed PPBL to halt the acceptance of customer deposits and top-ups across all platforms by February 29, 2024, which was subsequently extended to March 15, 2024. This stern directive came on the heels of what was described by the RBI as “persistent non-compliance and continued material supervisory concerns.” It was a part of a broader clampdown by the regulator that included prohibiting PPBL from onboarding new customers starting March 11, 2022.
Paytm Payments Bank has faced intense scrutiny under Chawla’s leadership and these restrictions from the RBI represent significant impediments to the bank’s operations. The regulatory actions led to a major shakeup at the top with Vijay Shekhar Sharma, the bank’s promoter, resigning from his role as part-time non-executive Chairman only last month—a decision that prefaced a comprehensive reconstitution of the bank’s board.
This reorganization introduced seasoned professionals from the banking and administrative sectors, including former Central Bank of India Chairman Srinivasan Sridhar, former Executive Director of Bank of Baroda Ashok Kumar Garg, and two retired Indian Administrative Service officers. Their collective expertise is expected to steer the bank towards compliance and improved governance.
One97 Communications Limited (OCL), the parent company of the Paytm brand, holds a 49 percent stake in PPBL and has made notable administrative changes. As of March 1, 2024, nearly all agreements between Paytm and PPBL have been terminated, and a disclosure on February 26, 2024, highlighted the bank’s newly reconstituted board comprising five independent directors, among them an independent chairperson, with no nominees from One97 Communications Limited.
Amidst these changes and in anticipation of future growth, PPBL continues to work closely with banking partners to augment services in merchant acquisition and the Unified Payments Interface (UPI). This collaboration has been bolstered by the National Payments Corporation of India’s approval for One97 Communications Ltd to act as a Third-Party Application Provider (TPAP) in the multi-bank UPI model.
Garnering support from major banks, Axis Bank, HDFC Bank, State Bank of India, and YES Bank will function as Payment System Provider (PSP) banks for Paytm, indicative of a robust framework for Paytm’s payments infrastructure. This integration and support illustrate Paytm’s resilience and adaptive capacity in the face of organizational and regulatory challenges.
Despite Chawla’s resignation and the consequent leadership transition, Paytm Payments Bank appears to forge ahead, continuing its efforts to solidify its position in the competitive digital banking landscape. With strengthened corporate governance and support from prominent banking institutions, PPBL is seemingly poised to surmount its current difficulties and embrace a new chapter in its corporate narrative.
