In the wake of recent actions by the Reserve Bank of India (RBI), Paytm Payment Bank experiences significant changes, with Vijay Shekhar Sharma stepping down as Chairman and relinquishing board membership.
Reshaping of Paytm Payment Bank’s Leadership
After RBI’s recent interventions, Paytm Payment Bank witnesses a major overhaul in its board structure. In an official statement released on Monday, Paytm announces the resignation of its founder, Vijay Shekhar Sharma, from the position of Part Time Non-Executive Chairman of Paytm Payment Bank. Additionally, he steps down from the board of Paytm Payments Bank.
Following Sharma’s resignation, the board undergoes a restructuring process, welcoming new members. Srinivasan Sridhar, former chairman of Central Bank of India, will now join the board, along with retired IAS Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhari Sibal.
Paytm Payments Bank Faces Uncertainty
The existence of Paytm Payments Bank has been under threat since the recent actions taken by the RBI. Notably, Vijay Shekhar Sharma holds the largest stake in the bank, and his departure raises questions about the future trajectory of the financial institution.
RBI Guidelines Impact Paytm UPI Services
Last week, the RBI issued new guidelines affecting Paytm Payments Bank, particularly its UPI services. The directive states that if Paytm UPI Services are linked to Paytm Payment Bank, they will cease to operate after March 15. To continue these services, customers and merchants must link their Paytm UPI to another bank. Paytm’s parent company, One 97 Communication Limited, is currently in talks with multiple banks for this transition.
RBI Advises NPCI to Sustain Paytm Payment Bank’s UPI Service
In response to the regulatory changes, the RBI has advised the National Payments Corporation of India (NPCI) to take necessary steps to maintain Paytm Payment Bank’s UPI services. The advisory includes migrating the @Paytm handle to other new banks, ensuring a seamless transition for customers and merchants.
Threat to Paytm Payment Bank Post-March 15
RBI emphasizes that the migration of UPI handles will only apply to customers and merchants linked to Paytm Payment Bank. This move aims to provide relief to Paytm Payment Bank’s UPI users and facilitate a smooth transition.
Paytm’s Application to NPCI for UPI Business
Paytm, in collaboration with Axis Bank, has applied to NPCI to function as a third-party application provider (TPAP) for UPI business. Currently not classified as TPAP due to UPI transactions, Paytm aims to secure this status, aligning itself with other institutions like Amazon Pay, Google Pay, Mobikwik, PhonePe, and WhatsApp.
The RBI urges NPCI to review One 97 Communications LTD’s plea to become a TPAP, emphasizing the need for a seamless migration of @Paytm handle customers if OCL achieves TPAP status.
