Paytm terminates inter-company agreements with payments bank unit

Paytm has discontinued inter-company agreements between the company and Paytm Payments Bank Limited (PPBL), according to a filing by the parent company, One97 Communications, on the stock exchange.

The new measures aim to ensure the independent operations of PPBL, the company added.

“Further, the shareholders of PPBL have agreed to simplify the Shareholders Agreement (SHA) to support PPBL’s governance, independent of its shareholders. The Board of OCL approved the termination of agreements and amendment of SHA on March 1, 2024,” One 97 Communications said [pdf].

The company reiterated its commitment to entering into new partnerships with other banks and taking measures to ensure uninterrupted services to its customers and merchants.

Earlier this week, Vijay Shekhar Sharma stepped down from his position as part-time non-executive chairman and board member of PPBL. The company also announced the reconstitution of its board of directors and plans to soon appoint a new chairman.

The developments come in the wake of the Reserve Bank of India (RBI) imposing a set of business restrictions on Paytm Payments Bank over non-compliance and regulatory concerns. The business restrictions are set to impact Paytm’s business verticals related to the payments bank, though the RBI has granted a few temporary reliefs.

Meanwhile, SoftBank has divested its stake worth Rs 580 crore in Paytm. This marks the fifth instance of SoftBank’s disposal of its shares in the company in the ongoing fiscal year. Now, the VC’s stake in Paytm has reduced to nearly 3%.

During this disinvestment, SoftBank disposed of its 2.17% stake which contracted its shareholding from 5.01% to 2.83%, according to regulatory filings.

SoftBank has already disposed of Rs 3,800 crores of worth shares in the current fiscal year ( May, July, December, and January). The disposal sums up to Rs 4,380 crore (as per the share price on the date of transactions).