In a bold move to streamline operations and enhance governance, India’s digital payments giant Paytm, along with its payments bank unit, has decided to terminate various inter-company agreements. This decision, aimed at reducing dependencies, marks a significant shift in the company’s strategy to ensure more autonomous operations. Paytm, officially known as One 97 Communications, hasn’t disclosed the specifics of the agreements ended but emphasizes the move’s importance in supporting the Paytm Payments Bank’s governance, independent of its shareholders.
The company’s leadership structure has also seen adjustments, with CEO Vijay Shekhar Sharma owning a 51% stake in Paytm Payments Bank, while the remainder is held by Paytm itself. This reconfiguration comes shortly after Sharma’s resignation from his roles as non-executive chairman and board member of the payments bank, signaling a major overhaul in governance following regulatory scrutiny.
The Reserve Bank of India’s recent directive for Paytm Payments Bank to halt operations by mid-March, citing compliance issues and supervisory concerns, has put additional pressure on the company. Issues such as inadequate customer identity checks and concerns over the bank’s independence from Paytm have been highlighted as areas needing improvement. Despite these challenges, Paytm’s strategic discontinuation of certain inter-company agreements reflects a proactive stance towards addressing regulatory concerns and strengthening its operational framework.
