Manju Agarwal, an independent director of Paytm Payments Bank, tendered her resignation from the board effective February 1. Her departure follows regulatory action taken by the Reserve Bank of India (RBI) against the bank.
Resignation Amid Regulatory Scrutiny
Agarwal’s resignation came in the wake of the RBI’s recent restrictions on Paytm Payments Bank. The central bank barred the bank from accepting new deposits or top-ups in customer accounts, wallets, FASTags, or other instruments starting from February 29.
Background and Ownership
Paytm Payments Bank is affiliated with One97 Communications Limited, which holds 49% of its paid-up share capital directly and through its subsidiary. The bank’s CEO, Vijay Shekhar Sharma, holds a 51% stake in the institution.
RBI’s Action and Response
The RBI cited “persistent non-compliance” as the reason for imposing restrictions on Paytm Payments Bank. RBI Governor Shaktikanta Das emphasized the importance of bilateral engagement with regulated entities to ensure compliance. However, when such engagement fails, regulatory action is taken.
Attempts for Resolution
Prior to the RBI’s announcement, Paytm CEO Vijay Shekhar Sharma met with officials from both the RBI and the finance ministry, including Finance Minister Nirmala Sitharaman. Despite these efforts, the central bank declined to grant concessions to Paytm Payments Bank, including an extension of the February 29 deadline.
Government’s Stance
During Sharma’s meeting with Finance Minister Sitharaman, she clarified that the regulatory action against Paytm Payments Bank was solely a regulatory matter. The government could not intervene to assist the company.
Conclusion
The resignation of an independent director from Paytm Payments Bank amidst regulatory scrutiny underscores the challenges faced by the institution. Despite efforts to resolve issues through engagement with regulatory authorities, the RBI’s enforcement of restrictions highlights the importance of compliance in the financial sector.
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