Vijay Shekhar Sharma: From raising an e-commerce giant to landing in controversies
Sharma introduced Paytm, which stands for “pay through mobile” and provides mobile recharge services. Although he started wallet services in 2011, the 2016 demonetisation was the catalyst for his huge push.
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One of the most well-known figures in India’s fintech sector, Vijay Shekhar Sharma, has been involved in a number of scandals.
Sharma introduced Paytm, which stands for “pay through mobile” and provides mobile recharge services. Although he started wallet services in 2011, the 2016 demonetisation was the catalyst for his huge push. He purchased front-page advertisements using Prime Minister Narendra Modi’s image in prestigious newspapers, referring to the demonetisation move as the “boldest decision in the financial history of independent India”.
Controversies- Hits and Misses
Paytm was entangled in controversy due to its ties to China after receiving substantial funding from Alibaba Group. Prior to the company’s initial public offering, the Chinese internet company rose to become the largest shareholder in Paytm, owning 34.7% of the company.
Paytm stated in August 2023 that its founder and CEO, Vijay Shekhar Sharma, will purchase a 10.3 share in Antfin through his foreign organization Resilient Asset Management BV, making him the company’s top stakeholder with a 19.42% stake. This move was made in an effort to shed the company’s reputation of being a Chinese-owned entity.
The IPO for the company began on November 8, 2021, with prices per share ranging from ₹2,080- 2,150.
In November 2023, the billionaire investor Warren Buffet’s Berkshire Hathaway sold their Paytm holding at a 31% loss per share. Paytm was purchased by Berkshire Hathaway for approximately ₹1279 per share, which it later sold for ₹877.29 each.
Currently holding the largest direct investment in Paytm is the Cayman Islands-registered SAIF III Mauritius Company Limited, with a 10.83 percent ownership, followed by Sharma’s Resilient Asset Management BV, with a 10.29 percent stake. Andrew Y Yan serves as managing partner of SAIF Partners, which is run by businesspeople of Chinese descent.
Dealings with RBI
Due to regulatory concerns, the RBI on June 19, 2018, forbade Paytm Payments Bank from opening any new accounts or wallets. On December 27, 2018, the RBI lifted this prohibition, effective December 31, 2018.
A show-cause notice was sent by the Office of Banking Ombudsman on March 6, 2019, in response to Paytm Payments Bank’s neglect of an account that had suddenly seen a spike in the volume of daily transactions including instantaneous transfers to other banks. It was determined that the acts violated the RBI’s KYC regulations.
The banking authority ordered the company to reapply 120 days after receiving government clearance for OCL’s investment into PPSL in accordance with FDI requirements. On July 29, 2021, RBI sent PPBL a show-cause notice for providing fraudulent documentation to RBI attesting to the completion of OCL’s August 28, 2017, transfer of the Bharat Bill Payment Operating Unit (“BBPOU”) to PPBL.
Payment and Settlement Systems Act, 2007 violation resulted in PPBL being fined ₹1 crore by RBI on October 1, 2021.
On October 10, 2023, RBI fined PPBL ₹5.93 crore for a number of infractions, including banks’ failure to identify beneficial owners for businesses they had on boarded to provide payout services. As per the findings of the banking regulator, PPBL failed to execute device binding control measures linked to ‘SMS delivery receipt check’ and reported a cyber security event with delay.
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