Paytm, Paytm Payments Bank To Discontinue Inter-Company Agreements

"As part of this process to reduce dependencies, Paytm and PPBL have mutually agreed to discontinue various inter-company agreements with Paytm and its group entities," reads the BSE filing

In response to RBI's actions regarding its associate firm, One 97 Communications announced on Friday that its board has approved discontinuing inter-company agreements with Paytm Payments Bank to lessen dependencies. This decision holds importance as Paytm Payments Bank Limited (PPBL) is currently under RBI scrutiny due to ongoing non-compliance and significant supervisory concerns. 

In a statutory filing, One 97 Communications, which owns and operates Paytm, stated that both the company and its associate entity, Paytm Payments Bank Limited (PPBL), have implemented additional measures to bolster the independent operations of PPBL.

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

Additionally, it stated that PPBL's shareholders have consented to simplify the Shareholders Agreement (SHA) to reinforce PPBL's governance, independent of its shareholders. The Board of OCL approved the termination of agreements and amendment of SHA on March 1, 2024. Paytm had previously announced its intention to establish new partnerships with other banks and implement measures to ensure seamless services for its customers and merchants. In its communication to stock exchanges on February 1, 2024, the company hinted at the potential financial ramifications.

"As informed earlier, One 97 Communications Limited (OCL) and its services that include the Paytm app, Paytm QR, Paytm soundbox, and Paytm Card machines will continue to work uninterrupted. Paytm is committed to uphold the highest standards of market-leading innovation and technology-enabled solutions for its customers," the company added.

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

Vijay Shekhar Sharma resigned from his position as part-time non-executive Chairman of Paytm Payments Bank Limited on Monday, prompting the reconstitution of the bank's board. PPBL will now initiate the process of appointing a new Chairman.