Paytm, along with its payments bank division, has decided to end several agreements between them. This move aims to reduce reliance on each other, according to the troubled payments company.
Termination of Agreements:
Paytm, formally called One 97 Communications, didn’t specify which agreements are being terminated. The payments bank has agreed to simplify its shareholders’ agreement. This is to ensure better governance, independent of its shareholders, as stated by the company.
Ownership Structure:
Vijay Shekhar Sharma, CEO of Paytm, owns a 51% stake in Paytm Payments Bank, while the remaining portion is owned by Paytm.
Recent Changes:
Mr. Sharma recently resigned as non-executive chairman and board member of the payments bank. This is part of a significant restructuring following regulatory actions by the central bank.
Regulatory Concerns:
The Reserve Bank of India (RBI) directed Paytm Payments Bank to cease operations by March 15. This decision was due to ongoing compliance issues and regulatory concerns. As a result, Paytm’s stock experienced a significant decline.
Regulatory Issues:
The concerns raised by the RBI included insufficient customer identity verification and a perceived lack of independence from the parent company, Paytm, according to sources familiar with the matter.
