Following the Reserve Bank of India’s (RBI) directive to Paytm Payments Bank Ltd (PPBL) to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29, Group CFO at Paytm, Madhur Deora issued a statement saying ‘Paytm and Paytm Payments Bank are not one entity”.
“There may be an impression that Paytm and Paytm Payment Bank is one, but by design and by structure, it is not and it cannot be,” said Madhur Deora. Following the RBI’s directive to Paytm’s associate bank, PPBL, there has been an impression that the company and its associate are one and the same.
He went on to add, “First it is an associate company and second is not an associate company in the sense that it is the same Bank. And first and foremost, for a bank is that, it has to follow the governance that a bank is supposed to follow, which is to say that has to has its independent management team, which reports to the board and the matters that have to go to committees of the board where there can only be independent directors.”
The president and Group CFO of Paytm further added that a bank has to have independent compliance and risk teams too. “Paytm, as a payments company, works with various banks (not just its associate), on various other products. The company has been working with other banks for the past two years and will now accelerate the plans and will completely move to other partners. The next phase of the company’s journey is to continue to expand its payments and financial services businesses, only in partnership with other banks,” he said.
Earlier, the fintech company in an exchange filing had also stated that it is allowed to have two board seats on the board of its associate as a part of its shareholder agreement and it does not influence on the operations of the bank. “We would take this opportunity to clarify that, as per banking regulations, Paytm Payments Bank Limited is run independently by its management and board. While OCL is allowed to have two board seats on the board of Paytm Payments Bank Limited, as a part of its shareholder agreement, OCL exerts no influence on the operations of Paytm Payments Bank Limited other than as a minority board member and minority shareholder,” the company stated in the regulatory filing.