Paytm Payments Bank and its parent business, One97 Communications, decided to end a number of inter-company partnerships. The RBI (Reserve Bank of India) has set a deadline of March 15th for Paytm Payments Bank to wrap up essential operations, like wallet services and deposits. This action arrives early on that date.
Board Approval and Shareholder Agreement Simplification
The business issued a statement stating, "According to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we wish to inform you that the Board of Directors of the Company approved the cancellation of various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL), on March 1, 2024, at 07:28 a.m. (IST), through circulation."
The statement said, "In addition, the PPBL shareholders have decided to streamline the Shareholders Agreement (SHA) in order to support PPBL's governance, independent of its shareholders."
On March 1, 2024, the OCL Board approved the SHA change and agreements' termination.
Response and Share Price Surge
Paytm previously declared that it would work with other banks and take steps to guarantee that its merchants and consumers would receive uninterrupted services. This decision coincides with that announcement. After suffering a decrease over the previous few trading days, Paytm shares saw a spike, increasing by as much as 4% in the wake of this announcement.
Regulatory Challenges and Reshuffling
Due to continuous non-compliance and ongoing supervisory concerns, Paytm has had difficulties since the RBI's strict measures against Paytm Payments Bank. The central bank recently intervened in the regulatory space by forbidding Paytm Payments Bank Limited from taking new deposits or top-ups in client accounts, wallets, FASTags, and other instruments after February 29. The deadline was then extended to March 15.
The board of Paytm Payments Bank Limited was reorganised as a result of the resignation of Paytm founder Vijay Shekhar Sharma on February 26. Prominent individuals, including retired IAS officer Debendranath Sarangi, former Bank of Baroda executive director Ashok Kumar Garg, former Central Bank of India chairman Srinivasan Sridhar, and former IAS officer Rajni Sekhri Sibal, are among the members of the reconstituted Board of Directors.
Ownership Structure
The owner of the Paytm brand, One97 Communications, owns 49% of the paid-up share capital, both directly and through a PPBL subsidiary. With the bank, Vijay Shekhar Sharma still has a 51% share.
Image Source: Multiple agencies)
(Inputs from agencies)
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