In a surprising turn of events that has murmured through the corridors of India’s financial sectors, Paytm Payments Bank Ltd (PPBL) announced the departure of its CEO and Managing Director, Surinder Chawla, citing personal reasons and a keenness to pursue other career opportunities. According to a regulatory filing made on April 9, Chawla submitted his resignation on April 8, 2024, and is slated to exit the organization on June 26 of the same year, subject to further agreement.
The resignation of Mr. Chawla is notably intermingled with concerns surrounding PPBL’s operations, particularly in light of recent sanctions imposed by the Reserve Bank of India (RBI). Chawla’s decision to step down from his role materializes after he joined PPBL in January of the previous year, a move preceded by RBI’s nod of approval for the payments bank.
The narrative of Paytm Payments Bank took a challenging turn when, on January 31, the RBI initiated a directive stopping PPBL from acquiring deposits or enabling top-ups across customer accounts. This restriction included wallets, FASTags, and other prepaid instruments, originally set to take effect post-February 29, although the deadline did see an extension to March 15.
This strict oversight by the RBI stemmed from what it flagged as “persistent non-compliance and continued material supervisory concerns,” as mentioned in a central bank statement. Increased scrutiny preceded a subsequent order on March 11, 2024, when the banking regulator prohibited PPBL from inducting new customers, effectively immediately.
In the wake of these developments, PPBL experienced a management reshuffle with the founder and tech entrepreneur, Vijay Shekhar Sharma, stepping down from his role as part-time non-executive Chairman. Concurrently, PPBL revitalized its board by welcoming four new faces including Srinivasan Sridhar, the former chairman of Central Bank of India, Ashok Kumar Garg, a prior executive director at Bank of Baroda, and two retired IAS officers.
Another dimension of this evolving scenario is One97 Communications Limited’s (OCL) 49% stake in PPBL. Disclosures on March 1, 2024, revealed that Paytm had terminated nearly all standing agreements with PPBL. Furthermore, as of February 26, 2024, a reconstituted PPBL board was reported to comprise five independent directors, including an independent chairperson, sidestepping any nominees from OCL.
The firm’s recent filing highlights Paytm’s concerted efforts to work closely with banking partners in order to enhance merchant acquiring and UPI services, despite the challenges it faces in the banking sector. Such efforts seem to be bearing fruit as the National Payments Corporation of India gave its stamp of approval to One97 Communications Ltd for participation in UPI as a Third-Party Application Provider (TPAP) under a multi-bank model. Intended to facilitate seamless payments, Axis Bank, HDFC Bank, State Bank of India, and YES Bank are set to serve as Payment System Provider (PSP) banks for Paytm.
Paytm Payments Bank’s recent upheavals, from compliance issues to high-profile administrative changes, certainly put the spotlight on the regulatory landscape facing India’s fintech entities. As the bank marches towards reconciling its regulatory commitments and operational strategies, the departure of Surinder Chawla from the helm represents not just a significant career move, but also a crucial juncture for the bank pivoting towards future governance and growth amidst stringent oversight.
