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"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 of PPBL," Paytm said in a regulatory filing.
Paytm's shares were up 3.1% to Rs 417.80 apiece in initial trade on BSE Sensex, which jumped over 600 points on India's solid third quarter growth. Paytm had risen to day's high of Rs 423, up by over a hundred rupees from its record low of Rs 318.35 hit last month.
The move to diassociate offerings and reduce dependency will see both Paytm and Payments Bank discontinue inter-company agreements. Paytm had earlier announced that it would sign up new partnerships with other banks and take measures to provide seamless services for its customers and merchants.
"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. 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," said the filing.
On January 31, the RBI asked PPBL to stop accepting deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards, after February 29. The deadline was later extended till March 15.
In addition to RBI scrutiny, the payments portal was also under the Enforcement Directorate's scanner, with the central agency conducting a preliminary examination of documents to ascertain if there were any transgressions under the Foreign Exchange Management Act (FEMA). The ED did not find any FEMA violations during its inquiry.
Earlier this week, on Monday, Vijay Shekhar Sharma - the founder of Paytm - announced his resignation from the board of Payments Bank, which replaced its directors with new inductees, mostly from the banking and bureaucratic fraternity. The reconstituted board now includes former Central Bank of India chairman Srinivasan Sridhar, retired IAS officers Debendranath Sarangi and Rajni Sekhri Sibal, as well as former executive director of Bank of Baroda Ashok Kumar Garg.
Amid the increased scrutiny, Japan's Softbank reduced its stake in payments firm Paytm to 2.83% from 5.01%. The Japanese investor has been gradually reducing stake in Paytm as it reportedly has plans to exit the company completely.
Paytm also clarified in the filing that its services would continue to operate seamlessly amid scrutiny, saying it was "committed to uphold the highest standards of market leading innovation and technology enabled solutions for its customers."
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