The resignation was officially communicated through a filing with the stock exchange, with Agarwal citing personal commitments as the reason for her departure.
In a regulatory filing, Paytm said, “We hereby submit that our associate entity, Paytm Payments Bank Limited (PPBL), has informed us that Manju Agarwal, Independent Director resigned from the Board of PPBL on February 01, 2024, due to her personal commitments which was noted by PPBL Board on February 06, 2024.”
Manju Agarwal is a former Deputy Managing Director at the State Bank of India (SBI), and had been serving on the PPBL board since May 2021.
"We hereby submit that PPBL is our associate entity and this event is not deemed material for the company and does not impact the operations/ business of the company, as per the provisions of Regulation 30 of the SEBI," the company added.
Regulatory Directives Trigger Resignation
Earlier reports by a media house had suggested that Agarwal's decision to step down was prompted by a directive from the Reserve Bank of India (RBI) to Paytm Payments Bank. The RBI had issued a directive in January, instructing the bank to wind down the majority of its operations, adding further scrutiny to the embattled fintech company.
RBI's Stringent Measures Due to Regulatory Non-Compliance
RBI has taken a stern stance against Paytm, emphasizing the company's continuous failure to adhere to regulatory guidelines despite repeated advisories. The RBI had initially imposed restrictions on Paytm Payments Bank on June 19, 2018, due to supervisory concerns, prohibiting the initiation of new account and wallet openings. This restriction was later lifted on December 27, 2018, with retroactive effect from December 31, 2018.
The RBI uncovered significant KYC irregularities, posing serious risks to customers and depositors. In its investigation, thousands of cases revealed a single PAN linked to over 100 customers, some exceeding 1,000. Transactions, amounting to crores of rupees, surpassed regulatory limits in minimum KYC pre-paid instruments, sparking money-laundering concerns. To address regulatory issues, on February 9, the payments firm established an advisory committee led by former SEBI chairman M Damodaran to guide PPBL on compliance and regulation.
Paytm Responds with Advisory Committee on Compliance
Responding to the regulatory challenges, Paytm had previously announced its intention to establish an advisory committee focusing on compliance and regulatory issues.
In an official statement released on Friday, the company confirmed the formation of the Committee, chaired by M Damodaran, a move seen as a strategic response to the recent regulatory pressures.
The newly formed Committee includes professionals with extensive expertise in finance and banking, such as MM Chitale, a former president of the Institute of Chartered Accountants of India (ICAI) and a former governing Council Member of the Banking Codes and Standards Board of India, nominated by the RBI. Additionally, banking experts like R Ramachandran, the former Chairman and Managing Director of Andhra Bank, have been appointed to the Committee.
"Board Announces Group Advisory Committee"
In an official release, the Board of One 97 Communications Limited (OCL), the company that owns the Paytm brand, stated, "The Board of One 97 Communications Limited (OCL, or the Company), which owns the brand Paytm, India's leading payments and financial services distribution company and the pioneer of QR and mobile payments, today announced the formation of a Group Advisory Committee, of 3 members, chaired by M Damodaran."
Background on Paytm's Ownership Structure
Paytm Payments Bank Limited (PPBL) is an associate of One97 Communications Limited (OCL). Currently, One97 Communications holds 49 per cent of the paid-up share capital (directly and through its subsidiary) of PPBL, while Vijay Shekhar Sharma, the founder of Paytm, maintains a 51 per cent stake in the bank.
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