SoftBank Exec Leaves Paytm Board Amid Audit

A managing partner of SoftBank’s Vision Fund has stepped down from the board at One97 Communications Ltd., which owns Indian payments company Paytm.

As Bloomberg reported Tuesday (March 15), Munish Varma resigned from the board Monday over “personal commitments and other preoccupations,” Paytm said in an exchange filing.

While Paytm made headlines late last year with the largest initial public offering (IPO) in India’s history, it has seen its share of challenges in recent months. The company saw its shares drop 27% on the first day of trading following the IPO, which now trade at more than 70% under the offer price.

Last week, the Reserve Bank of India also blocked the company’s Paytm Payments Bank from accepting new customers, putting more strain on the company’s stock.

The RBI initially said its move was based on certain “material supervisory concerns,” and said the restrictions will continue pending an audit of Paytm’s information-technology systems.

However, an unnamed 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 uncovered during yearly inspections made by the RBI India’s central bank, according to the source. Per the report, the information was shared with entities who were indirect stakeholders in the Paytm banking unit.

Since Paytm Payment Bank is a regulated financial institution, its IT vendor is required to have a service level agreement that segregates the company and its assets from its owners.

India’s central bank said it is also concerned that Paytm’s financial division onboarded thousands of new customers with improper KYC information, which could have been money laundering operatives, the source said.

Paytm has said it is taking measures to comply with the RBI and has appointed its own third-party auditor. Existing customers aren’t affected by the RBI decision.