Paytm Payments Bank: Market share plummets, MD-CEO Surinder Chawla quits

Paytm Payments Bank’s managing director and CEO Surinder Chawla has tendered his resignation on 8 April as confirmed by a stock exchange filing. Citing personal reasons and a desire to explore better career prospects, Chawla is set to depart from his role, with his official last day being 26 June, exactly four months from the day the company's board was reconstituted.

The announcement also revealed that nearly all agreements between parent company One97 Communications and PPBL have been terminated, signalling a major shift in the company's structure. The board of Paytm Payments Bank is now reconstituted, comprising five independent directors, including an independent chairperson, with no nominees from the company. One97 Communications Ltd holds a 49 per cent stake in PPBL, underscoring its influence over the bank's operations.

One97 Communications said it is committed to collaboration with banking partners to enhance merchant acquisition and UPI (unified payments interface) services, indicating a strategic focus amidst organisational changes. This move follows Vijay Shekhar Sharma’s resignation from the PPBL board on 26 February, adding to the series of leadership changes within the company.

The restructuring comes from regulatory actions imposed by the Reserve Bank of India (RBI) earlier this year. On 31 January, RBI imposed significant business restrictions on PPBL, including a bar on accepting fresh deposits and conducting credit transactions after 29 February, subsequently extended to 15 March.

One97 Communications has experienced a significant decline in its market share within the UPI ecosystem. According to data from the National Payments Corporation of India (NPCI) website, Paytm's UPI market share has plummeted to 9 per cent in March, marking its lowest level in the past four years.

This decline follows a trend that began in February when Paytm's UPI market share dropped to 11 per cent, down from the previous month. This dip coincided with the imposition of stringent restrictions by RBI on its associate company, PPBL.

The initiative by National Payments Corporation of India (NPCI) to share transaction volume and value data for UPI apps since April 2020 highlights that Paytm's current market share is its lowest recorded figure. The mobile payment app, which faced regulatory challenges, has also witnessed a notable decrease in its transaction value market share, now standing at 6.7 per cent, a figure similarly at its lowest point in recent years.

This downward trend contrasts with Paytm's performance in 2023, when it typically held around nine per cent market share in terms of transaction value. The data underscores the impact of regulatory actions on Paytm's position within the competitive UPI landscape, highlighting the company's challenges in reclaiming lost ground.

Despite these challenges, there have been positive developments for Paytm. On 14 March, NPCI granted approval to One97 Communications to participate in UPI services as a third-party application provider (TPAP) under the multi-bank model. This approval allows Paytm to continue offering UPI services, vital for its operations post the cessation of PPBL's banking operations.

Chawla had joined PPBL in January 2023 following the payments bank receiving approval from RBI. Following Sharma’s exit, the PPBL board has seen notable additions, including former Central Bank of India chairman Srinivasan Sridhar, former Bank of Baroda executive director Ashok Kumar Garg, and two retired IAS (Indian Administrative Service) officers.

As the company navigates these transitions, Paytm in a statement reiterated its commitment to enhancing services through collaborative efforts with banking partners. The recent approval from NPCI further strengthens its position in the digital payments landscape.

Axis Bank, HDFC Bank, State Bank of India, and YES Bank are set to play pivotal roles as payment system provider (PSP) banks to Paytm, signalling continued partnerships in the fintech sector.