Paytm CEO Surinder Chawla resigns amidst regulatory scrutiny

Surinder Chawla, the Managing Director and CEO of Paytm Payments Bank (PPBL), has tendered his resignation from the company, as stated in a regulatory filing on Tuesday.

Chawla's departure comes amidst the banking regulator RBI's actions against the beleaguered payments bank.

According to the regulatory filing by One97 Communications, the owner of the Paytm brand, Chawla cited personal reasons and the desire to explore better career prospects as the motives behind his resignation. He is scheduled to be relieved from his position at PPBL by close of business hours on June 26, 2024, unless otherwise mutually agreed upon.

Chawla had joined PPBL in January last year following the payments bank's approval from the Reserve Bank of India.

The regulatory scrutiny on PPBL intensified when, on January 31, the RBI directed the bank to cease accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. This directive was later extended to March 15 due to persistent non-compliance and continued supervisory concerns, as stated by the central bank.

Further action was taken on March 11, 2022, when the RBI prohibited PPBL from onboarding new customers with immediate effect.

In response to these regulatory actions, Vijay Shekhar Sharma, the promoter, stepped down as part-time non-executive Chairman of Paytm Payments Bank Limited. Subsequently, the bank's board underwent reconstitution, with the induction of former Central Bank of India chairman Srinivasan Sridhar, former Bank of Baroda Executive Director Ashok Kumar Garg, and two retired Indian Administrative Service (IAS) officers.

One97 Communications Limited (OCL) holds a 49% stake in PPBL.

Additionally, Paytm disclosed that most agreements between the company and PPBL have been terminated, and the bank's board has been reconstituted with five independent directors, including an independent chairperson, as per disclosures made on March 1, 2024, and February 26, 2024, respectively.

In line with ongoing efforts, Paytm continues to collaborate with banking partners to enhance merchant acquiring and UPI services, as stated in the regulatory filing.

Moreover, the National Payments Corporation of India recently granted One97 Communications Ltd approval to participate in UPI as a Third-Party Application Provider (TPAP) under the multi-bank model. Axis Bank, HDFC Bank, State Bank of India, and YES Bank will serve as Payment System Provider (PSP) banks to Paytm.