PTC India Financial Services Ltd. (PFS) finds itself in the spotlight as CEO R Balaji responds to recent board resignations and reaffirms the company's commitment to corporate governance and transformation.

Board Resignations and CEO's Response

PFS recently faced the unexpected resignation of three independent directors, who cited difficulties in functioning impartially. CEO R Balaji, addressing the situation, stated that he was unaware of any issues raised by the departing directors and emphasized that board meetings had proceeded harmoniously.

Balaji highlighted the company's dedication to maintaining one of the most independent boards in the country. He confirmed ongoing communication with the former directors who had raised unspecified concerns. Despite the resignations, four independent directors remain on the board, ensuring continued oversight.

Clarifications on Corporate Governance

In response to queries from stock exchanges, PFS provided detailed clarifications regarding the resignations. The company expressed surprise at the unexpected departures and the reasons cited, noting that no grievances or concerns were raised during the 13th meeting of Independent Directors.

The management emphasized that in all board and committee meetings, independent directors had participated openly and fairly, exercising complete freedom to express their views. PFS stated that at no point did any independent director complain of circumstances preventing them from discharging their duties.

Historical Context and Regulatory Oversight

The recent resignations echo a similar event in January 2022, when three independent directors resigned, alleging violations of corporate governance norms. This led to investigations by the Securities and Exchange Board of India (SEBI), resulting in orders against the then Non-Executive Chairman and MD&CEO. Subsequent appeals and rulings by the Securities Appellate Tribunal (SAT) have addressed some of these issues, with certain matters still pending.

Strengthening Governance and Compliance

In response to past concerns, PFS has taken several steps to strengthen its governance and compliance framework:

1. Reconstitution of the board with adequate independent directors
2. Appointment of new Whole-time Directors, including MD&CEO and CFO
3. Strengthening of the Compliance Function
4. Regular filings and disclosures to stock exchanges, including Secretarial Compliance Reports

Four-Pillar Transformation Strategy

Amidst these governance discussions, CEO Balaji outlined the company's transformation strategy built on four key pillars:

1. Improving systems and processes
2. Building institutional capability
3. Broadening employee talent
4. Creating a more granular book to withstand economic shocks

Balaji noted an increase in non-retail holding, interpreting this as a sign of confidence in the company's transformation plan. He expressed management's continued confidence in ongoing efforts and investor support.

Commitment to Ethical Practices

PFS reaffirmed its commitment to upholding the highest standards of governance, transparency, and ethical business practices. The company stated its intention to continue meeting stakeholder expectations while navigating these challenges.

As PFS works through these governance issues and implements its transformation strategy, stakeholders will be watching closely to see how the company balances its growth ambitions with robust corporate governance practices.

PTC India Financial Services (PFS) has found itself in an unexpected situation following the abrupt resignation of three independent directors. The company, a subsidiary of PTC India Limited, expressed surprise at the departures and has issued a clarification to address the matter.

Unexpected Resignations

The three independent directors who resigned are Smt. Seema Bahuguna, Shri Naveen Bhushan Gupta, and Smt. PV Bharathi. These directors were appointed on November 15, 2022, for a three-year term that was set to end on November 14, 2025. Their sudden exit, less than halfway through their tenure, has raised eyebrows in the financial community.

Company's Response

In a statement to the stock exchanges, PFS management expressed their astonishment at the resignations, particularly due to the reasons cited by the departing directors. The company emphasized that none of the directors had previously raised any concerns with the Board of Directors or the management before submitting their resignations.

Clarifications Provided

PFS has issued several clarifications in response to the situation:

1. The company asserts that all independent directors, including those who resigned, had participated openly and fairly in board meetings, audit committee meetings, and other board committees.
2. PFS maintains that the directors had complete freedom to express their views without any restrictions, and these views were duly recorded.
3. The management highlighted that statutory and regulatory committees of the board were chaired by independent directors, as required by regulations.
4. A recent meeting of independent directors on June 4, 2025, reportedly assessed the quality and timeliness of information flow between management and the board. At this meeting, no grievances or concerns of the nature mentioned in the resignation letters were discussed.

Commitment to Governance

Despite the unexpected turn of events, PFS has reaffirmed its commitment to upholding high standards of governance, transparency, and ethical business practices. The company stated its intention to continue meeting stakeholder expectations.

Looking Ahead

The sudden departure of three independent directors poses challenges for PFS in terms of corporate governance and regulatory compliance. The company will likely need to initiate the process of appointing new independent directors to fill these crucial roles on its board.

As this situation unfolds, stakeholders and market observers will be keenly watching how PFS addresses these governance concerns and maintains the stability of its board structure in the coming weeks.