Paytm crisis update: Director's resignation, advisory panel set up, RBI chief’s ‘no review’ comment
3 min read • Updated: February 13, 2024, 6:38 PM
Restrictions on Paytm Payments Banking were announced by the RBI on January 31, 2024. As a result of the action, investor sentiment declined and share prices fell. The advisory council will include MM Chitale and R Ramachandran to monitor regulatory activities and improve compliances. RBI governor Shaktikanta Das on Monday ruled out any review of the central bank’s action against Paytm Payments Bank Ltd
- RBI issued restrictions on Paytm Payments Banking on the 31st of January 2024
- The move resulted in falling share prices and declining investor sentiments
- R Ramachandran and MM Chitale are to be part of the advisory committee to oversee regulatory affairs and strengthen compliances
- Reserve Bank of India (RBI) governor Shaktikanta Das on Monday ruled out any review of the central bank’s action against Paytm Payments Bank Ltd (PPBL)
Paytm, one of India's leading digital payment enablers, has been experiencing increased strain since the Reserve Bank of India issued a notice to the fintech major.
As a result of continued non-compliance issues the RBI (Reserve Bank of India) enforced operational restrictions on PPBL (Paytm Payments Bank Limited). As a consequence, stock prices sharply fell on the National Stock Exchange and Bombay Stock Exchange.
Who owns Paytm?
Paytm was founded in 2010 as a financial technology company that facilitated digital payments and financial services. However, Paytm Payments Bank was introduced in 2017 as a specialised banking entity after receiving approval from the RBI in 2015.
The fintech juggernaut was founded by CEO Vijay Shekhar Sharma (51%) under the ownership of One97 Communications (49%). PPB (Paytm Payments Bank) is Paytm’s banking partner where funds deposited into the digital wallet are controlled by PPB.
What triggered the RBI's action?
On the 31st of January 2024, the RBI issued a restriction on PPB from facilitating money transfers, collecting deposits, onboarding new customers and providing credit services after the 29th of February 2024.
As cited by the central bank of the nation, the action was a response to continued concerns regarding material supervisory and non-compliance. However, there were no specifics provided at the time.
On Monday the 12 February, 2024, One97 Communications confirmed independent director Manju Agarwal’s resignation from PPBs board of directors, citing personal commitments. Agarwal has been serving on the Paytm Payments Bank board since May 2021.
Furthermore, Monday's trade saw Paytm shares jump 4% to ₹434.80 on BSE. Additionally, the fintech firm has reported the arrangement of an advisory committee, chaired by M Damodaran, former chairman of SEBI.
However, Paytm shares slumped 10% on Tuesday afte Reserve Bank of India (RBI) governor Shaktikanta Das on Monday ruled out any review of the central bank’s action against Paytm Payments Bank Ltd (PPBL), saying the decision was taken after a lot of consideration and a comprehensive analysis of the lender’s functioning.