The big announcement of the day in the financial capital of India was on expected lines the chairman and founder of Paytm Payments Bank Vijay Shekhar Sharma quit ahead of a Reserve Bank of India ordained deadline to the digital banking unit to wind up its operations by March 15. Reading out the riot act to the digital payments organisation, after several earlier warnings to behave over serious supervisory concerns, the move to clean up the its operations by March 15.
Warnings over supervisory concerns
Reading out the riot act to the digital payments organisation, after several earlier warnings to behave over serious supervisory concerns, the move to clean up the Augean stables was a foregone conclusion. However, except the stock market which had witnessed a surge by 5 per cent in Paytm shares earlier on Monday, nobody expected the bank mired in controversy would get any kind of a lifeline. However, now it may just also have won that. The bank also appointed, perhaps after a nudge by the central banker - four new independent directors including two retired bankers and two retired IAS officers.
Though one can only guess, their job is likely to be more than the mandatory guiding us toward enhancing our governance structures and operational standards. In all likelihood the four good men (including one lady) who include a former PSU bank chairman, will also be tasked to try and revive the digital payments organisation besides ensuring it follows the law of the land. Surprisingly, the payments bank had five top bankers among its six independent directors while nosediving into a crisis of failed compliance and possible brushes with financial fraud.
Startling revelations
Most of them quit as revelations came to the fore about the problems that Paytm has in its functioning including probes by central agencies. However, the fact remains that India's independent directors who are supposed to be watchdogs placed on corporate boards to look after the interests of small shareholders, have more often than not been guilty of sleeping on their job. Remember the infamous Satyam Computer Services episode where a Rs 7,000-crore scam unfolded below the noses of a starstudded board?
The Paytm crisis has once again underlined the dire need to shake up the board structure as well as tighten the regulatory structure of our financial and corporate set-up. While the RBI blew its whistle to bring order, other regulators seemed to have remained blissfully unaware of anything brewing in the digital mega-player. If the wake call is unheeded, more such crisises may well come to pass, tarnishing Mumbais and Indias image as a rising economic powerhouse.
