Embattled Indian fintech giant Paytm is undergoing a major restructuring of its payments bank unit's board following a clampdown by the Reserve Bank of India (RBI). The move comes after the RBI ordered Paytm Payments Bank to wind down operations due to non-compliance issues.

Significant Changes

• Vijay Shekhar Sharma Steps Down Paytm founder Vijay Shekhar Sharma, previously the non-executive chairman, has resigned from the board, aiming to "enable the transition" towards a revamped governance structure.
• New Board Members The company has appointed three new independent directors: Srinivasan Sridhar (former Chairman of Central Bank of India), Ashok Kumar Garg (former Executive Director of Bank of Baroda), and two retired Indian Administrative Service officers.

Reasons for Restructuring

• RBI Clampdown Earlier in February 2024, the RBI directed Paytm Payments Bank to cease operations by March 15th due to "serious supervisory concerns" around customer identification and its relationship with Paytm. This triggered a significant drop in Paytm's stock price.
• Enhanced Governance Paytm emphasizes that the new board's expertise will be "pivotal" in strengthening its governance structures and operational standards, aiming to regain the trust of the regulatory body.

Future Uncertainties

While Paytm supports its banking unit's decision to transition to an independent board, the future of the bank remains uncertain. The RBI hasn't explicitly stated whether the bank's license will be revoked, but the appointment of a new board signals Paytm's intent to address the RBI's concerns and potentially seek an extension on the wind-down deadline.