On Friday, the embattled payments firm announced that Paytm and its payments bank unit have mutually agreed to terminate various inter-company agreements. This decision aims to reduce dependencies between the two entities.
Paytm, formerly known as One 97 Communications, did not specify the agreements being terminated.
The payments bank agreed to simplify the shareholders’ agreement to “support (Paytm Payments Bank’s) governance, independent of its shareholders,” the company stated.
Paytm Payments Bank is majority-owned by Paytm CEO Vijay Shekhar Sharma, who holds 51%, while the remaining portion is owned by Paytm.
After Sharma’s resignation as non-executive chairman and board member of the payments bank unit, a major restructuring followed, prompted by a central bank clampdown. The move took place just days later.
Due to ongoing compliance issues and supervisory concerns, the Reserve Bank of India directed Paytm Payments Bank to cease operations by March 15. This decision resulted in a drop in Paytm stock.
Reuters previously reported that the unit faced action due to concerns about inadequate customer identity checks. Additionally, there were worries about a lack of arms-length distance from the parent company Paytm.
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