Explained: Why Vijay Shekhar Sharma resigned from Paytm Payments Bank

Explained: Why Vijay Shekhar Sharma resigned from Paytm Payments Bank

Paytm founder and CEO Vijay Shekhar Sharma has resigned from his position as part-time non-executive chairman and board member of Paytm Payments Bank Limited (PPBL), almost a month after the Reserve Bank of India (RBI) initiated regulatory action against it.

One97 Communications Limited, the parent company of Paytm, has informed that PPBL has reconstituted its board, adding that Sharma’s resignation will “enable this transition”.

Brokerage firm Macquarie came out with a note following the announcements, saying that Sharma is trying to “salvage some value from Paytm Payments Bank by sending a message to the regulatory that he is willing to give up control of PPBL”.

The brokerage went on to say that the survival of PPBL would depend on whether RBI would provide relaxation for carrying out routine banking operations.

It also added that if PPBL is allowed to carry out operations as an independent entity, it would result in a positive outcome for Paytm. “If PPBL is allowed to carry out ops as an independent entity it will provide additional profitability to Paytm,” it said.

However, the brokerage maintained an “underperform” rating on the stock with a target price of Rs 275. It had downgraded the Paytm stock just two weeks ago.

The average rating of 13 analysts on Paytm is currently “hold” and at least two brokerages have dropped coverage of the stock completely.

As of 10:30 am, Paytm shares were up 1.40 per cent on the Bombay Stock Exchange (BSE) at Rs 434.10 apiece.

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