In a major setback for mobile payments firm Paytm, President and Chief Operating Officer Bhavesh Gupta, on May 4, tendered his resignation from the company citing personal reasons, the company said in a disclosure to stock exchanges.
One97 Communications Limited, which runs Paytm, has also announced the appointment of Rakesh Singh as the new CEO of Paytm Money, while Varun Sridhar, the existing CEO, has been appointed as the Chief Executive Officer of Paytm Services Private Limited (PSPL).
Both Paytm Money and PSPL are subsidiaries of OCL, and facilitate stock broking, investments in mutual funds and other wealth management products for Paytm customers.
Gupta will continue in his role until the end of this month and will be transitioned to an advisory role in the company. Gupta had a big role in building Paytm's lending business over the last couple of years, which reached around Rs 15,000 crore in a quarter.
The announcement comes barely a few days before One97 Communications Limited (OCL), which runs Paytm, is set to announce its Q4 results, which is expected to be bad because of the regulator's restrictions on its associate firm, Paytm Payments Bank Limited (PPBL).
"Our focus on payments and lending is stronger than ever, and I will work with the seasoned leaders that we have in each of our businesses to execute our plans," Paytm founder and CEO Vijay Shekhar Sharma said in a statement.
Paytm has exhibited strong revenue growth on the back of distributing loans on its platform, which was also a high-margin business. The lending platform's commission contributed around 20 percent to the company's revenue and around 25 percent to its margin.
However, after the Reserve Bank of India's restrictions on PPBL, the company has paused lending activities for more than a month. This is likely to have impacted the company's topline and bottom line more than it predicted in an investor conference call soon after the RBI action.
Paytm has also seen its UPI market share decline to 9 percent in March this year, its lowest in four years. UPI transactions contribute to around 75 percent of the company's gross merchandise value (GMV). PPBL also held the Paytm wallet license and the usage of that instrument has also been tapering off since the RBI's action. It is likely to become zero once Paytm users exhaust their wallet balance.
Paytm has been diversifying its business to add more products and services. The setback in lending is also forcing the company to focus on the fast-growing equity investment products, which explains the leadership rejig at PPSL and Paytm Money.
"I am also excited about the direction that we have taken under the leadership of Varun to expand Paytm’s role in deepening the penetration of mutual fund and wealth management products in our country. I welcome Rakesh to Paytm Wealth business where we are committed to building world-class technology-led wealth offerings to young Indians,” Sharma added in the media statement.
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