India's Paytm and its payments bank agree to discontinue inter-company deals
File photo of the Paytm logo.
Indian financial technology company Paytm and its payments bank unit mutually agreed to discontinue various inter-company agreements in the process to reduce dependencies.
In a statement issued on Friday (Mar 1), Paytm said, "One 97 Communications Ltd (Paytm) would like to inform that the company and its associate entity, Paytm Payments Bank Limited (PPBL), have introduced additional measures to strengthen their approach towards independent operations 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," the statement added.
The shareholders of PPBL agreed to simplify the Shareholders Agreement (SHA) to support the payments bank's governance independent of its shareholders, the company further said.
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Vijay Shekhar Sharma quits PPBL board
This development comes days after Paytm's Chief Executive Officer (CEO) Vijay Shekhar Sharma stepped down as non-executive chairman and board member of PPBL.
Sharma owns a 51 per cent stake in the payments bank unit. The bank will now appoint a new chairperson and has also seen two independent directors step down since December last year.
Also read |Explained: RBI orders Paytm’s banking arm to stop fresh business. What happens next?
Earlier, the Reserve Bank of India (RBI) asked PPBL to wind down operations by March 15 due to persistent compliance issues and supervisory concerns, triggering a meltdown in Paytm's stock.
Paytm likely to partner with 4 Indian banks to enable UPI transactions
On Monday, a report by the news agency Reuters said that Paytm would likely partner with Axis Bank, HDFC Bank, State Bank of India and Yes Bank for processing transactions via the popular unified payments interface (UPI).
Also watch |Paytm overhauls banking board, CEO Vijay Shekhar Sharma resigns from Payments Bank Board
This comes after the RBI asked UPI's operator National Payments Corporation of India (NPCI) to examine a request from Paytm to become a third-party application provider and to facilitate four to five banks to act as service providers for it.
"Talks to onboard banking partners are on, and Paytm wants to start this process with large banks that have the technological bandwidth to handle large volumes seamlessly," a source told the news agency.
(With inputs from agencies)