paytm-paytm-payments-bank-to-discontinue-inter-company-pacts-to-reduce-dependencies

Amid regulatory actions taken by the Reserve Bank of India (RBI) on its affiliate, One 97 Communications announced on Friday that its board has given approval to end certain agreements with Paytm Payments Bank, aiming to reduce dependencies.

 

This decision holds significance as Paytm Payments Bank Limited (PPBL) has been under scrutiny by the RBI due to persistent non-compliance and ongoing supervisory concerns.

 

In a filing to the Bombay Stock Exchange (BSE) on Friday, One 97 Communications, the parent company of Paytm, stated that both entities, Paytm and PPBL, have implemented additional measures to strengthen the independent operations of PPBL.

 

"As part of this effort to reduce dependencies, Paytm and PPBL have mutually agreed to terminate various inter-company agreements with Paytm and its group entities," the BSE filing noted.

 

Moreover, PPBL shareholders have concurred to simplify the Shareholders Agreement (SHA) to bolster PPBL's governance independently of its shareholders, the filing added.

 

The Board of One 97 Communications approved the termination of agreements and amendment of SHA on March 1, 2024.

 

Earlier, Paytm had announced plans to form new partnerships with other banks and take steps to ensure seamless services for its customers and merchants. In a communication to stock exchanges on February 1, 2024, the company hinted at possible financial impacts.

 

"As previously communicated, One 97 Communications Limited (OCL) and its services, including the Paytm app, Paytm QR, Paytm soundbox, and Paytm Card machines, will continue to operate without interruption. Paytm is committed to maintaining the highest standards of market-leading innovation and technology-enabled solutions for its customers," the company affirmed.

 

Recall that in a regulatory move in January, the RBI prohibited PPBL from accepting fresh deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29, with the deadline later extended to March 15.

 

On Monday, Vijay Shekhar Sharma resigned as part-time non-executive Chairman of Paytm Payments Bank Limited, leading to a reconstitution of the bank's board, and PPBL initiated the process of appointing a new Chairman.