SoftBank Exec quits Paytm board amid audit
A managing partner of SoftBank’s Vision Fund has resigned from the board of One97 Communications Ltd., owner of Indian payments company Paytm.
As Bloomberg reported Tuesday, March 15, Munish Varma resigned from the board on Monday over “personal commitments and other concerns,” Paytm said in an exchange filing.
While Paytm grabbed headlines late last year with the biggest initial public offering (IPO) in Indian history, it has had its share of challenges in recent months. The company saw its shares fall 27% on the first day of trading following the IPO, which are now trading more than 70% below the offer price.
Last week, the Reserve Bank of India also blocked the company’s Paytm Payments Bank from accepting new customers, which further weighed on the company’s shares.
The RBI initially said its decision was based on certain “material oversight concerns” and said the restrictions would continue pending an audit of Paytm’s information technology systems.
However, an anonymous source told Bloomberg that the audit was due to allegations that Paytm shared data with organizations based in China and also failed to provide adequate know-your-customer (KYC) documentation. ).
Read more: Paytm Bank under audit over alleged data sharing with China
The data sharing was discovered during annual inspections by India’s central bank RBI, the source said. According to the report, the information was shared with entities that were indirect stakeholders of the Paytm banking unit.
Since Paytm Payment Bank is a regulated financial institution, its IT provider is required to have a service level agreement that separates the business and its assets from its owners.
India’s central bank said it was also concerned that Paytm’s finance division had onboarded thousands of new customers with incorrect KYC information, which could have been money launderers, the source said.
Paytm said it was taking steps to comply with the RBI and appointed its own third-party auditor. Existing customers are not affected by the RBI decision.