Amid RBI's action on its associate firm, One 97 Communications on Friday said the board has approved the discontinuation of inter-company pacts with Paytm Payments Bank to reduce dependencies.
The move assumes significance as Paytm Payments Bank Limited (PPBL) is under the RBI's lens over persistent non-compliance and continued material supervisory concerns.
In a statutory filing on Friday, One 97 Communications (which owns and operates Paytm) said the company and its associate entity, Paytm Payments Bank Limited (PPBL), have introduced additional measures to strengthen their approach towards 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," the BSE filing said.
Also, the shareholders of PPBL have agreed to simplify the Shareholders Agreement (SHA) to support PPBL's governance, independent of its shareholders, it added.
Inter-pay agreements terminated
The Board of OCL approved the termination of agreements and amendment of SHA on March 1, 2024.
Paytm had announced earlier that it would sign up new partnerships with other banks and take measures to provide seamless services to its customers and merchants. In its intimation to stock exchanges on February 1, 2024, the company had indicated the possible financial impact.
"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.
RBI takes action on Payment banks
It may be recalled that in a regulatory action in January, the RBI barred PPBL from accepting fresh deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29 - a deadline that was later extended to March 15.
On Monday, Vijay Shekhar Sharma stepped down as part-time non-executive Chairman of Paytm Payments Bank Limited and the board of the bank was reconstituted. PPBL will commence the process of appointing a new Chairman.
