Manju Agarwal Resigns As Independent Director From Paytm Payments Bank Board — Exclusive

Agarwal, who served on the board as an independent director, resigned with effect from Feb. 1 this year.

Since the Reserve Bank of India imposed stringent restrictions on Paytm Payments Bank, Agarwal didn't see any real future for the bank, the people quoted above said on condition of anonymity.

Paytm Payments Bank's board also tried to resolve multiple problems with the bank but failed to meet RBI's standards, they said.

Agarwal, a former deputy managing director of the State Bank of India, served on the board of Paytm Payments Bank since May 2021. Previously, she was associated with NPCI and Jio Payments Bank.

In SBI, she also headed merchant acquiring business, debit card strategy and transaction, rural business, and financial inclusion.

Shinjini Kumar, also an independent director on the board, exited the bank in December after her tenure ended, the people added on the condition of anonymity.

On Jan. 31, the RBI imposed stringent restrictions on Paytm Payments Bank, an associate company of One97 Communications Ltd.

In its orders, the regulator said that Paytm Payments Bank cannot accept fresh deposits, top-ups or credit transactions in its accounts after Feb. 29. This was after the RBI observed persistent non-compliance and major supervisory concerns at the entity.

The first supervisory restriction on the payments bank was made six months after it got the licence, a person with knowledge of the matter said. Hence, it is clear that they always had issues, they said.

Another person with knowledge of the matter explained a possible rationale behind RBI's crackdown. The regulator itself couldn't comprehend what payments banks, as full-blown entities, would become. Once the understanding got sophisticated, the RBI took action against some entities while they were small, the person said.

Moreover, a lack of engagement with payments banks also became a concern for the regulator, the person said. There was confusion as to whether to deal with the chief executive or the board or the owners, the person said.

In the monetary policy address, RBI Governor Shaktikanta Das said that the restrictions on regulated entities are always proportionate to the gravity of the situation.

Deputy Governor Swaminathan J also said that it was a supervisory action on a regulated entity for "persistent" non-compliance.

"Any supervisory action is usually preceded by months of bilateral conversations as it is incumbent on the regulator to protect consumer interest at the end of the day," he said in the post-policy press conference.