Paytm said it has withdrawn its nominee from the Paytm Payments Bank Board and Vijay Shekhar Sharma has stepped down as Part-Time non-executive Chairman and Board member to enable the reconstitution of the board.
Paytm share price rallied 5% in early trade on Tuesday after its founder Vijay Shekhar Sharma resigned from the board of its associate Paytm Payments Bank. Paytm shares opened more than 3% lower, but rebounded sharply within minutes of opening and gained as much as 4.99% to ₹449.30 apiece on the BSE.
One97 Communications, the parent company of Paytm said it has withdrawn its nominee from the Paytm Payments Bank Board and Vijay Shekhar Sharma has stepped down as Part-Time non-executive Chairman and Board member to enable the reconstitution of the board.
The Reserve Bank of India (RBI) has imposed major restrictions on Paytm Payments Bank, restricting it from accepting fresh deposits and doing credit transactions after March 15.
With the latest move, Sharma is sending a message to the regulator that he is willing to give up control of Paytm Payments Bank, according to the brokerage firm Macquarie, CNBC-TV18 reported, The brokerage firm does not expect the RBI to authorise any related-party transactions between Paytm and Paytm Payments Bank hereon.
If Paytm Payments Bank is allowed to carry out operations, it will provide addition to profitability for Paytm, Macquarie said.
It has maintained an ‘Underperform’ rating on Paytm with a target price of ₹275 per share.
The newly reconstituted board of Paytm Payments Bank Ltd (PPBL) includes former chairman of Central Bank of India Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former executive director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal.
Additionally, the board has former Executive Director of Punjab & Sind Bank Shri Arvind Kumar Jain as Independent Director and Surinder Chawla, MD & CEO at Paytm Payments Bank, the company said in a release.
Meanwhile, the National Payments Corporation of India (NPCI) is examining a request by One 97 Communication to become a Third-Party Application Provider (TPAP) for the UPI channel, for the continued operation of the Paytm UPI app, reports said.
If approved, this would allow Paytm to continue processing payments via UPI, but will need a set of newly identified banks to back the app.
At 9:30 am, Paytm shares were trading 0.65% higher at ₹430.75 apiece on the BSE.
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