Sharma, however, did not carry out his plan and remains on the board of Paytm Payments Bank.
The discussions took place late last year against the backdrop of queries from the Reserve Bank of India (RBI) on compliance concerns, culminating in an order on January 31.
They assume significance given the issue has been a bone of contention for several other banks as well where the regulator has sent directives on management and board changes.
“There was a discussion at the board level for him to step back amid rising queries from the regulator. The show cause notice on compliance issue was expected around December,” a person aware of the matter said. “There was an idea that they should remove Paytm to maintain arm’s length distance between the bank and the Paytm app. This was something that was flagged by RBI earlier also with regards to Paytm Mall – ecommerce – being there on the main app,” this person said.
It is not clear why the proposal was not formally presented before the board and also sent to the regulator.
Discover the stories of your interest
“We are not in a position to comment as Paytm Payments Bank Limited is under the supervisory engagement of the regulator,” a spokesperson for the bank said.
Sharma is a 51% owner of the payments bank while the rest is held by One 97 Communications – the parent of Paytm brand and the app.
Independent directors resign
Shinjini Kumar, a former Bank of America and PricewaterhouseCoopers (PwC) executive, resigned in December, said the people cited above. While her resignation has been accepted and a replacement is being finalised, Kumar is said to have attended two board meetings of the bank as a special invitee. This was done to meet RBI rules on independent directors, the people said.
Kumar had served as the chief executive of Paytm Payments Bank between 2016 and 2017 and is currently the cofounder of Salt, a woman-focussed financial services platform.
The second board member – Manju Agarwal, a former deputy managing director of State Bank of India (SBI) – is also said to have exited the board, according to reports.
People aware of banking rules said the payments bank needs to have more independent directors than executive directors due to which Kumar had to attend the board meetings as a special invitee.
With the latest exits, the bank’s board currently consists of three independent directors including Arvind Kumar Jain, former executive director, Punjab & Sind Bank; former Accenture managing director Pankaj Vaish; and former Department for Promotion of Industry and Internal Trade (DPIIT) secretary Ramesh Abhishek.
From One 97 Communications, the board includes group head of regulatory affairs Dr Srinivas Yanamandra, as well as chief operating officer and president Bhavesh Gupta. Paytm founder Sharma and Payments Payments Bank managing director and chief executive officer Surinder Chawla are the other members on the board.
Last week, the Noida-based payments and financial services firm faced a major challenge after its associate entity Paytm Payments Bank was barred by the RBI from accepting any fresh deposits or providing banking services after February 29.
Speaking at a post-monetary policy interaction with reporters on Thursday, RBI governor Shaktikanta Das said the regulator would issue clarifications on the matter in the coming week.
Das said the central bank has always laid emphasis on “bilateral engagement” with regulated entities, nudging them to take corrective action with “sufficient time” being provided to take these steps.