Paytm and Affiliate Bank Terminate Agreements

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Paytm and Affiliate Bank Terminate Agreements

The owner of Paytm, India’s largest mobile-payment company, and its affiliate bank have decided to end various agreements in order to focus on individual business objectives.

Independence Boost

One97 Communications announced on Friday that this move would help in reducing dependencies and ensuring that governance of Paytm Payments Bank remains independent from its shareholders.

Positive Market Response

Following this announcement, shares of the Paytm owner saw a rise and were up by 4.0% at 421.50 rupees ($5.08).

Regulatory Background

The decision to terminate agreements comes after India’s central bank directed Paytm Payments Bank to stop new customer sign-ups and deposits in January due to noncompliance with financial regulations and significant supervisory concerns. This directive meant that the bank could no longer accept new deposits or process credit transactions, although existing customers could still withdraw funds.

Impact on Shares

The regulatory measures had a negative impact on One97 Communications shares, which dropped by more than 45% in February.

Leadership Changes

Recently, Paytm’s founder and CEO, Vijay Shekhar Sharma, resigned from the board of the affiliate bank as part of a restructuring process.

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