In a significant development within Paytm Payments Bank (PPBL), Managing Director and CEO Surinder Chawla has stepped down from his position, prompting discussions on the future of the bank amid intense regulatory scrutiny. Chawla’s exit was disclosed on Tuesday in a regulatory filing by One97 Communications, the parent company of the Paytm brand.
Surinder Chawla’s resignation, set for June 26, 2024, was put forth on April 8, 2024, and is attributed to personal reasons and the pursuit of new career opportunities. PPBL has stated that the departure date could be adjusted based on mutual consent between the parties involved. Chawla had joined the executive team at PPBL in January of the previous year, following the nod of approval from the Reserve Bank of India (RBI) for Chawla’s appointment.
Paytm Payments Bank has been under the radar of the RBI, which took major enforcement action against it. On January 31, the central banking institution ordered PPBL to halt the onboarding of new customer accounts, along with pausing additional deposits to existing accounts, wallets, FASTags, among others. Initially set for February 29, the deadline extended to March 15. This decisive measure was in response to persistent non-compliance with regulations and ongoing material supervisory concerns, as stated by RBI.
The backdrop to Chawla’s resignation also includes March 11, 2022, regulatory sanctions when RBI barred PPBL from enlisting new customers with immediate effect, piling on the challenges for the payments bank. This regulatory upheaval triggered major corporate governance shifts within PPBL. Last month, Vijay Shekhar Sharma relinquished his role as part-time non-executive Chairman of the bank. A reconstitution of the board followed, bringing in a cadre of venerable figures, including Srinivasan Sridhar, a former chairman of Central Bank of India, Ashok Kumar Garg, a former executive director of Bank of Baroda, and two retired IAS officers, beefing up the bank’s leadership with a diverse set of experienced professionals.
The stakes and interests of One97 Communications Limited (OCL) within PPBL stand at 49 per cent. The continuous restructuring saw the termination of nearly all agreements between Paytm and PPBL as of March 1, 2024, with PPBL’s board welcoming five independent directors, including an independent chairperson, and explicitly including no representatives from OCL, as revealed in a February disclosure.
Despite resignations and regulatory impediments, PPBL continues to push forward, with an assurance of collaboration with banking partners to improve merchant acquiring and UPI services—a sentiment echoed in the recent regulatory filing. This dedication to service enhancement was followed by the National Payments Corporation of India authorizing One97 Communications Ltd to function in the UPI ecosystem as a Third-Party Application Provider (TPAP) adopting the multi-bank model. This partnership will see reputable banks like Axis Bank, HDFC Bank, State Bank of India, and YES Bank serving as Payment System Provider (PSP) banks for Paytm.
This series of events marks a pivotal time for Paytm Payments Bank as it navigates the tough waters of regulatory compliance and corporate governance. The resignation of a key figurehead like Surinder Chawla, in conjunction with the bank facing significant challenges from the regulator, signals a period of transition and transformation within the company’s leadership and operational framework. As PPBL works to address the supervisory concerns raised by the RBI and restructures its governance, the focus remains on maintaining its commitments to customers and partners and seeking stability in its leadership in the days to come.
