New Delhi: Paytm Payments Bank independent director Manju Agarwal has reportedly resigned from the board following an RBI order that imposed restrictions on the bank's operations. According to a source, Agarwal resigned with effect from February 1.
An email query sent to PPBL did not elicit any reply. "Paytm Payments Bank independent director Manju Agarwal has resigned from the company's board after RBI order," the source said.
RBI order to Paytm Payments Bank
The RBI issued a directive on January 31, instructing Paytm Payments Bank to cease accepting deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29.
Paytm Payments Bank Limited (PPBL) is an associate of One97 Communications Limited (OCL). One97 Communications holds 49 per cent of the paid-up share capital (directly and through its subsidiary) of PPBL. Vijay Shekhar Sharma has a 51 per cent stake in the bank.
The RBI said that despite repeated reminders and guidance, Paytm continued to violate regulatory guidelines, prompting the RBI to take strict action against the fintech company.
Paytm app not impacted by directives
The RBI on Thursday said that the regulatory action is against Paytm Payment Bank Ltd (PPBL) and Paytm App will not be impacted by it. "Just one clarification, this particular action is against Paytm Payments Bank and not to be confused with Paytm App...App is not impacted by this action," RBI Deputy Governor Swaminathan J said in the media interaction after the bi-monthly Monetary Policy Committee (MPC) meeting.
Asked if banks can partner with Paytm wallet, he said it is a business decision and they have to carry out required due diligence as per their board-approved policy. "I am sure they will carry out due diligence if they have got to do a partnership," he said.
During the briefing RBI Governor Shaktikanta Das said there are a lot of questions and concerns in the minds of people about PPBL, and the Reserve Bank will be coming out with a detailed FAQ (frequently asked questions) next week which will make things clear.
Paytm CEO meets Finance Minister
A few days ago Paytm CEO Vijay Shekhar Sharma held discussions with Finance Minister Nirmala Sitharaman. The meeting followed the Reserve Bank of India's (RBI) stringent directive issued on January 31, which mandated an immediate halt to the onboarding of new customers by Paytm Payments Bank and called for a cessation of its key banking services post-February 29.
The RBI's decision was prompted by "persistent non-compliances and continued material supervisory concerns" identified within the bank. Consequently, Paytm Payments Bank was directed to cease additional deposits, withdrawals, and top-ups across various customer-related financial instruments, including wallets, accounts, prepaid devices, and National Common Mobility Cards (NCMC).
The regulatory action had a profound impact on Paytm, with shares of its parent company, One97 Communications Ltd, experiencing a sharp decline. Over two days, from January 31 to February 2, 2024, the company's market capitalization decreased by Rs 17,378.41 crore, reflecting a 36 percent drop in share value.
In response to the RBI's directives, Paytm requested an extension of the February 29 deadline and sought clarity regarding the transfer of licences for wallet business and FASTag operations. However, no resolution or remedial measures were decided upon during the meeting between Sharma and RBI officials.
The crisis prompted a group of founders to appeal to RBI Governor Shaktikanta Das and Finance Minister Sitharaman, urging a review of the regulatory actions imposed on Paytm Payments Bank. They stressed the importance of reassessing the proportionality of the restrictions, considering their potential impact on the payments bank, the fintech ecosystem, and the broader economy. They also advocated for an opportunity for Paytm to address deficiencies and demonstrate compliance.
Despite the challenges, Paytm clarified that neither the company nor Vijay Shekhar Sharma are under investigation for any Enforcement Directorate probe or Foreign Exchange Management Act (FEMA) violations. Additionally, rumours of negotiations with Mukesh Ambani for Jio Financial Services to acquire Paytm wallets were dismissed.
(With PTI inputs)
Also Read: Action against Paytm for "persisted non-compliance", adequate time was given: RBI
