On March 1, One 97 Communications (OCL), the parent company of Paytm, disclosed to the stock exchanges that the Paytm board has greenlit the termination of various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL). Additionally, OCL revealed that PPBL’s shareholders have consented to streamline the Shareholders Agreement (SHA) to enhance PPBL’s governance, independent of its shareholders.
These decisions come amidst ongoing regulatory actions by the Reserve Bank of India (RBI) against PPBL, citing significant supervisory concerns. On January 31, the RBI imposed significant business restrictions on PPBL due to a prolonged history of non-compliance by Paytm promoters, including violations related to KYC and AML norms.
In its communication to the stock exchanges, OCL stated that the board approved the termination of agreements and SHA amendment on March 1, 2024. Earlier, Paytm had announced plans to establish new partnerships with other banks and implement measures to ensure uninterrupted services for its customers and merchants.
Reiterating its commitment to providing innovative and technologically advanced solutions, Paytm affirmed that its services, including the Paytm app, Paytm QR, Paytm soundbox, and Paytm Card machines, will continue without interruption.
On February 16, Paytm announced a partnership with Axis Bank for merchant payment settlements. The company shifted its nodal account to Axis Bank to ensure seamless merchant settlements, as stated in the release from One97 Communications.
Following its January 31 decision, the RBI issued Frequently Asked Questions (FAQs) for PPBL bank account holders, clarifying various aspects of the directions and assuring customers that they wouldn’t be adversely affected by the central bank’s actions.
The RBI extended the deadline for PPBL to cease accepting fresh deposits and conducting credit transactions to March 15 from February 29. Earlier, the regulator prohibited Paytm from accepting fresh deposits and conducting credit transactions due to major irregularities in KYC compliance, posing serious risks to customers, depositors, and wallet holders.
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