Vijay Shekhar Sharma resigns as chairman of Paytm Payments Bank: Will Paytm shares rise again?
Upstox
2 min read • Updated: February 27, 2024, 1:27 PM
Summary
Paytm Bank’s decision to reconstruct its board is aimed to reassure the regulatory body about the company’s commitment to adhere to norms and enhance governance structure.
Paytm founder and CEO Vijay Shekhar Sharma has resigned from the board of crisis-hit Paytm Payments Bank (PPBL) ahead of the 15 March deadline to wind down its business operations. PPBL has reconstituted its board with the appointment of independent and executive directors.
Why did Vijay Shekhar Sharma quit?
Vijay Shekhar Sharma steps down as part-time non-executive chairman of PPBL to enable a smooth transition as PPBL has moved to a new board structure consisting only of independent and executive directors. PPBL has also informed that it will commence the process of appointing a new chairman.
PPBL’s new board will consist of several banking industry veterans and retired IAS officers, including Ex-Central Bank of India chairman Srinivasan Sridhar, former executive director of Bank of Baroda Ashok Kumar Garg, retired IAS officer Debendranath Sarangi, Retd. IAS Rajni Sekhri Sibal.
How will Paytm stock react as Vijay Shekhar Sharma steps down from PPBL board?
Experts believe that Paytm Bank’s decision to reconstruct its board is aimed to reassure the regulatory body about the company’s commitment to adhere to norms and enhance governance structure. Following the rejig, Vijay Shekhar Sharma will continue to hold controlling stake (51%) in PPBL, while Paytm will golf the remaining stake.
This move will also be seen as an attempt to disassociate Paytm from its associate payments bank unit and position it as an independent entity, which could positively impact Paytm’s stock.
Paytm shares have taken a beating since RBI’s action against Paytm Payments Bank. Paytm stock is down more than 50% since 31 January. However, the stock has witnessed some recovery in the last week, hitting the upper circuit for the sixth time in the last seven trading sessions to recover from its all-time low of ₹318.05 per share.
The recent surge in the Paytm share price comes after the company's partnership with new banking entities and the RBI extending the deadline for winding down the payment bank's operations.