Indian digital payments provider Paytm has announced that it will be cutting back on its business ties with its banking affiliate, Paytm Payments Bank.
The company said in a Friday (March 1) filing with the National Stock Exchange of India that its board of directors has “approved the discontinuation of various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL).”
This move is seen as an effort to appease regulators and it comes as regulators have been pushing for a clearer distinction between the two entities, Bloomberg reported Friday.
Paytm and Paytm Payments Bank are both part of billionaire Vijay Shekhar Sharma’s FinTech empire, but the bank is not controlled by the publicly traded mobile wallet firm, according to the report.
Regulators in India recently barred the bank from accepting fresh deposits in its customer accounts, leading to disruptions in Paytm’s business and a significant drop in its share value, the report said.
Despite these challenges, shares of Paytm, which is publicly traded as One97 Communications Ltd., saw a 3.6% increase early on Friday, per the report. However, the stock is still down about 45% since the regulators imposed restrictions on the bank on Jan. 31, saying the restrictions will take effect March 15.
Sharma, who owns 51% of the bank, has resigned from the board of Paytm Payments Bank and stepped down as a part-time non-executive chairman in another part of the effort to create more distance between the two entities, according to the report.
It remains to be seen whether these measures will satisfy the regulator, the Reserve Bank of India (RBI), which has previously expressed concerns about the bank’s operations, the report said.
Sharma has been working to forge new partnerships with other banks to ensure the continuity of Paytm’s FinTech services, per the report.
In its Friday filing, the company said: “Paytm had announced earlier that it would sign up new partnerships with other banks and take measures to provide seamless services for its customers and merchants.”
It added that “the Paytm app, Paytm QR, Paytm soundbox and Paytm Card machines will continue to work uninterrupted.”
