Vijay Shekhar Sharma Quits Paytm Payments Bank, Why? Shares Surge 5%

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Vijay Shekhar Sharma Resigns as Paytm Payments Bank Chairman

Vijay Shekhar Sharma, Resigns, Share Rallies

Vijay Shekhar Sharma steps down as Paytm Payments Bank chairman, with Surinder Chawla assuming leadership. Arvind Kumar Jain, former Executive Director of Punjab & Sind Bank, joins as Independent Director.

One97 Communications, Paytm’s parent company, confirmed Sharma’s resignation from the board of Paytm Payments Bank on Monday. The company stated that Sharma’s departure facilitates a transition, with PPBL initiating the appointment of a new Chairman, as per an exchange filing.

Former Central Bank of India chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, ex-executive director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal have joined as independent directors. Additionally, the board includes former Executive Director of Punjab & Sind Bank Arvind Kumar Jain and Surinder Chawla, MD & CEO at Paytm Payments Bank.

Surinder Chawla, MD & CEO at Paytm Payments Bank, expressed enthusiasm for the new appointments, citing their expertise as pivotal in enhancing governance and operational standards. He emphasized their role in upholding compliance and best practices.

Shri Srinivasan Sridhar, a board member, outlined his commitment to leveraging his banking experience to expand the bank’s compliant services. He aims to establish PPBL as a benchmark in regulatory compliance, delivering value while strictly adhering to regulatory frameworks and best practices.

Shri Sridhar, with over 40 years in banking, holds the role of Independent Director at Jubilant Pharmova. His leadership spans positions at Export Import Bank of India, Central Bank of India, and National Housing Bank.

Shri Debendranath Sarangi, a Board Member at Paytm Payments Bank, emphasizes his commitment to upholding regulatory compliance and corporate governance. As a retired IAS officer with extensive experience in public administration, he serves as an Independent Director on various boards, including Southern Petrochemical Industries Corporation Limited and Voltas Ltd.

Paytm Live Share Price

In early Tuesday trading, Paytm shares surged by 5% following founder Vijay Shekhar Sharma’s resignation from the Paytm Payments Bank board. Initially opening over 3% lower, the shares quickly rebounded, reaching a peak of 4.99% at ₹449.30 on the BSE.

One97 Communications, Paytm’s parent company, announced the withdrawal of its nominee from the Paytm Payments Bank Board and Sharma’s resignation as Part-Time non-executive Chairman and Board member to facilitate board restructuring.

The Reserve Bank of India (RBI) imposed significant restrictions on Paytm Payments Bank, halting fresh deposits and credit transactions after March 15.

This move signals Sharma’s willingness to relinquish control of Paytm Payments Bank, as per brokerage firm Macquarie’s analysis on CNBC-TV18. Macquarie predicts no further RBI approval for related-party transactions between Paytm and Paytm Payments Bank.

Approval by the National Payments Corporation of India (NPCI) to designate One97 Communication as a Third-Party Application Provider (TPAP) for the UPI channel is under NPCI review. If accepted, Paytm can continue UPI operations, contingent on support from newly identified banks.

At 8:00 pm, Paytm shares traded 5% higher at ₹406.20, with Macquarie maintaining an ‘Underperform’ rating and a target price of ₹275 per share.

The Reason Behind Vijay Shekhar Sharma’s Resignation from Paytm Payments Bank

Days before the RBI’s March 15 deadline for PPBL to cease key operations, Vijay Shekhar Sharma resigns from his role as part-time non-executive chairman and board member of Paytm Payments Bank Limited (PPBL).

Following regulatory actions by the Reserve Bank of India (RBI), Paytm’s CEO, Vijay Shekhar Sharma, steps down from his positions at Paytm Payments Bank Limited (PPBL), nearly a month after the RBI initiated regulatory measures against it.

One97 Communications Limited, the parent company of Paytm, announces that PPBL has reconstituted its board, stating that Sharma’s resignation will facilitate this transition.

According to a note by brokerage firm Macquarie, Sharma’s resignation may indicate an attempt to salvage value from PPBL by signaling a willingness to relinquish control. The firm suggests that PPBL’s survival depends on potential RBI relaxation for routine banking operations.

The brokerage firm also suggests that if PPBL operates independently, it could positively impact Paytm’s profitability. Despite this potential, Macquarie maintains an “underperform” rating on Paytm’s stock, with a target price of Rs 275. This rating was downgraded just two weeks ago.

Currently, the average analyst rating for Paytm is “hold,” with at least two brokerages ceasing coverage of the stock entirely.

Also Read: Paytm Considering PhonePe, Google Pay Model to Sustain UPI

Source: Google Mint India Today

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