DNA Explainer: Why Vijay Shekhar Sharma resigned as Paytm Payments Bank chairman

Days after RBI's crackdown on Paytm Payments Bank (PPBL) over persistent non-compliance, Vijay Shekhar Sharma has resigned as part-time non-executive chairman of the bank. PPBL will commence the process of appointing a new chairman. Last month in January, the central bank barred PPBL from accepting fresh deposits or top-ups in customer accounts, wallets, FASTags and other instruments after February 29. However, RBI later extended the deadline to March 15.

On Monday, One 97 Communications, the owner of the Paytm brand, informed that its associate entity PPBL has reconstituted its Board of Directors with the appointment of ex-Central Bank of India chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and former IAS officer Rajni Sekhri Sibal. They have recently joined as Independent Directors, it elaborated.

But why did Vijay Shekhar Sharma step down as PPBL chairman?

One97 Communications Ltd (OCL) holds 49 per cent of the paid-up share capital (directly and through its subsidiary) of PPBL. While Sharma has a 51 per cent stake in the bank. Sharma resigned from the Board of Paytm Payments Bank to enable the transition of board members.

He revealed that his resignation from the board and the appointment of independent directors were strategic steps to enable a smooth transition and enhance governance structures. OCL said it supports PPBL's move of opting for a board with only independent and executive directors by removing its nominee. PPBL said that it will commence the process of appointing a new chairman.

On Friday, RBI had advised the National Payments Corporation of India (NPCI) to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle '@paytm' to 4-5 other banks, in a bid to prevent any disruptions in the payment ecosystem. As per the website of PPBL, it has 30 crore wallets and 3 crore bank customers.