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Paytm discontinues its agreements with Paytm Payments Bank

The move can be seen as an attempt by Paytm to distance itself from the troubled Paytm Payments Bank, which has been significantly restricted by the RBI from carrying out any payments or financial activities.

Paytm on March 1 informed its investors that the company had discontinued various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL). This comes a few days after Paytm founder and CEO Vijay Shekhar Sharma resigned as non-executive chairman of PPBL and Paytm removed its nominee from the PPBL Board as well.

While Paytm claims that both these moves are to make PPBL more independent in its operations, they are also an attempt by Paytm to distance itself from the troubled Paytm Payments Bank, which has been significantly restricted by the Reserve Bank of India (RBI) from carrying out any payments or financial activities after the central bank found “persistent non-compliance and continued material supervisory concerns in the bank.”

What agreements did Paytm and Paytm Payments Bank have: Paytm Payments Bank provided most of the payment and banking services on the Paytm app including UPI, Paytm Wallet, FASTag, National Common Mobility Card (NCMC), etc. All these services on the Paytm app were interrupted following the RBI restrictions and Paytm is working with new banking partners to keep these services running as usual for Paytm app users. The company has already shifted its nodal account to Axis Bank and is reportedly working with Yes Bank and Axis Bank to provide UPI services.

Paytm still owns 49 percent of PPBL: Despite the cancelling of agreements, Paytm is still tied to Paytm Payments Bank because of its ownership stake. One 97 Communications, the owner of Paytm, owns a 49 percent stake in PPBL while Paytm founder and CEO Vijay Shekhar Sharma owns the rest.

For more on what’s going on with Paytm and Paytm Payments Bank, here’s our detailed coverage:


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